Erratum: This report is a correction to the document published at 16:08 UK time today to incorporate changes to our target price and estimates which were not properly reflected in the initial publication. Christmas nightmare JD Sports delivered the first retailer warning of the year, following on from the Nikemare Before Christmas, resulting in a double-digit cut to FY Feb-24 forecasts. It attributed this to weather, high levels of promotional activity across the industry, apparel pricing, and calendar effects. The bigger question is the outlook for FY Feb-25, and management will provide guidance in March. We cut our forecasts by 13% to Adj PBT GBP 1bn, which is about what we expected them to deliver this year. The dust needs to settle but we stick with it - we still believe JD is well positioned and undervalued. Sales and gross margins miss Organic sales growth in the 22 weeks of H2 to 30 Dec were +6%, with LFLs of +1.8%. This was below management expectations, and notably only achieved through higher discounting (in the US in particular). Management gave several reasons: mild weather, unexpectedly promotional industry, calendar impacts, uncompetitive pricing in certain apparel lines and competition. FY Feb-24 Adj PBT guidance was cut from GBP c.1,040bn to GBP 915-935m, with the majority due to the sales miss. Looking for Guidance Management will provide FY Feb-25 Adj PBT guidance in March. We reduce our estimate to GBP 1,000m from GBP 1,150m. There is uncertainty about how much of the challenges relate to specific brand partners, and how much to transient issues like weather and inventory positions. We think LFL growth of c.4% and a modest margin recovery is plausible, but investors will look for evidence first. Kicking on ... once the dust settles On our new base case forecasts, the stock (at GBp c.120 intraday) trades on CY24 P/E c.9x, or c.7x ex-cash. Our target price falls to GBp 180 (from GBp 215) after this warning, which would imply that...