LONDON, May 21 (Reuters) -

British sportswear retailer JD Sports posted a 2%

fall in first-quarter underlying sales and warned that higher

prices in its key U.S. market from President Donald Trump's

tariffs could hit customer demand.

JD, which makes nearly 40% of its sales in the United

States through its Finish Line, Shoe Palace and Hibbett brands,

warned in April

that profits would only grow slightly, if at all this year,

even before any potential impact from tariffs.

The company is facing headwinds from a promotional

market, worries over consumer spending and a drop off in demand

for Nike ( NKE ) products, which account for 45% of its sales.

The group said on Wednesday that while it had limited

visibility on the impact from tariffs, it was taking action by

further diversifying the range of countries from which it

sources goods.

The biggest potential impact would be a rise in the

price of products for consumers which could impact demand and

dent confidence.

"Our strong and agile multi-brand model positions us

well to navigate these market conditions and we are focused on

controlling our cost base," JD said in its statement.

In the medium term, it said it remained confident of

delivering improved shareholder returns.