The plunging JD Sports (LSE: JD) share price has given me a right old kicking. But now I hope the beleaguered trainer retailer is finally set to kick on.
I first snapped up the stock on 22 January 2024, after it dipped on the back of a profit warning triggered by a lacklustre Christmas trading period.
I’d been waiting years to take a position in what I saw as one of the FTSE 100’s standout growth stars. This felt like my moment.
It didn’t go to plan. I bought in at 115p, but the price kept falling. Still convinced of the long-term potential, I bought again at 100p on 10 January 2025. Again, the trigger was a poor Christmas. And again, it was a poor call.
JD Sports shares kept sliding, hitting 80p. On 20 March, I averaged down for the third and final time.
Hard knocks and hard tariffs
My timing was horrible again. Just a fortnight later, Donald Trump’s ‘Liberation Day’ tariffs hammered global retail. JD Sports, now heavily exposed to the US after its $1.1bn acquisition of retail chain Hibbett, was right in the firing line.
By 8 April, the shares had slumped to around 63p. My average entry price was 101p, leaving me nursing a paper loss of 38%.
But a loss isn’t real until it’s been realised, and I had no intention of selling. I still believed in the company’s long-term potential. I just had to stomach the volatility.
Now the tide seems to be turning.
The JD Sports share price has surged 22% in the past month, making it one of the top FTSE 100 performers over that period.
It remains 28% down over 12 months and 48% lower across two years though. Plenty of investors have suffered worse than me.
The reversal of Trump’s tariff threats and the UK trade deal stemmed the panic. But it’s not over.
JD Sports also sells European brands like Adidas in the US, and trade tensions with the EU remain unresolved. Still, after a US-China breakthrough, there’s optimism that agreement can be reached.
Signs of growth
JD Sports now trades just above 93p, well above the 80p I paid for my third tranche and edging closer to the £1 I paid in January.
Averaging down doesn’t always work. Just because a share price falls doesn’t mean it can’t fall again.
The group’s latest results on 9 April offered some much-needed encouragement. Full-year profit is expected to land between £915m and £935m this time, in line with earlier guidance.
Organic revenue rose 5.8%, and a £100m share buyback was launched. The business remains profitable and cash generative.
At just under seven times earnings, the price-to-earnings ratio remains remarkably low.
The 17 analysts covering the stock have issued a median one-year target of 114p. If correct, that’s a rise of around 22% from today’s price. That would put me nicely in the black.
Forecasts aren’t guarantees, but I think the scope for recovery is real. Investors might also consider buying today, provided they can withstand the odd kicking too.
