I spent two hours in the flagship Oxford Street store of FTSE 100 retailer JD Sports Fashion (LSE: JD) just after Christmas, and emerged feeling a bit stressed. The sound system alone was enough to give this middle-aged dad a headache.
On the plus side, my partner and our two kids each emerged with a pair of heavily discounted trainers, and I was thrilled with my sleek black Adidas Gazelles.
I was a little concerned to see that my JD Sports shares had jumped 3.31% while I was in the shop. Had we spent that much?
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Will JD Sports be fast out of the blocks in 2025?
The experience taught me that, yes, I was getting old. But what did I learn about the outlook for JD Sports?
The store was pretty busy, although not completely chokka. The staff had been issued with handy consoles that allowed them to check whether they had our sizes in stock, and alert them up from the storeroom if they did. Sadly, I didn’t get a smile out of any of them (the staff, that is, the consoles were quite cheery).
The discounts were pretty big – and the range of cut-price trainers was wide. Plus they had most of the sizes we requested. I’m hoping this doesn’t signal that JD Sports has been left with an overhang of Christmas stock.
That was a real problem last year. A weak Christmas forced the board to issue a profit warning in January. The JD Sports share price has fallen 40% over the last year. That makes it one of the worst performers on the FTSE 100.
I snapped up the stock a couple of weeks after that warning, and again in July. I’m down around 18%. There were moments of excitement in that time, with JD shares spiking to almost 160p in September.
It ended 2024 badly though, as mild weather and discounting by rivals hitting sales in October, especially in the US. Pre-presidential election uncertainty didn’t help.
Chairman Andy Higginson has been vocal about the impact of UK Budget hikes to employers’ National Insurance contributions, which land in April. The 6.7% minimum wage hike won’t help either. Especially since the percentage increase is higher for staff under 20, who were in the majority when I was there.
I think this growth share will come back strong
With inflation rising and consumers squeezed, analysts expected a tough winter trading period. We’ll find out soon enough.
I still think there’s a brilliant opportunity here, with the shares trading at just 7.76 times earnings. That’s dirt cheap. JD’s also making a big push in the US, following April’s acquisition of rival Hibbett.
The 15 analysts offering one-year share price forecasts have produced a median target of just over 157p. If correct, that’s an increase of almost 67% from today’s 94p. That looks supremely optimistic but I think it’s possible. What we really need is a consumer recovery, with shoppers happy to pay full price.
If interest rates remain high and growth sluggish, JD Sports shares could idle. But I’m optimistic about the longer term and willing to bide my time. I think that 67% target’s very achievable, even if it falls short this year.
