The JD Sports Fashion (LSE:JD.) share price leapt 7% in early trading today (27 June) following the release of Nike’s results for the year ended 31 May 2025. It’s believed that the American sportswear giant accounts for around half of the UK retailer’s global revenue. This dependency means the share prices of the two tend to move in tandem.
Difficult times
But Nike’s results were disappointing. Compared to the previous year, revenue was down 10% to $46.3bn, net income was 44% lower at $3.2bn, and diluted earnings per share (EPS) fell 42% to $2.16bn.
Nike’s president and chief executive Elliott Hill acknowledged that the numbers “are not where we want them to be”. But despite the impact of tariffs on the group’s manufacturing operations in Asia, he was confident that the group’s turnaround plan will deliver.
And investors appear convinced. Although poor, the results were better than analysts had been expecting. In after-hours trading, the stock was up over 10%.
Closer to home
Today, this has prompted a similar reaction on this side of the Atlantic with the JD Sports share price being the top performer on the FTSE 100. But the stock remains 45% below its 52-week high and, in my opinion, continues to offer good value for money.
Analysts are forecasting EPS of 11.81p for the current financial year, which ends in January 2026. If correct, it means the stock’s trading on just under seven times forward earnings.
This is low by historical standards and probably reflects concerns about the fragility of the global economy. Discretionary spending is one of the first things to be cut during an economic slowdown. Although the athleisure market remains a firm favourite with the group’s target of 16-24 year-olds, they’re just as vulnerable to a recession as any other demographic.
Having said that, despite Nike’s woes, it’s still able to command a multiple of 29 times its FY25 earnings.
Pros and cons
Ironically, JD Sport’s decision to expand overseas could hurt it in the short-term. It now has 925 more stores in the US than it does in Europe. JP Morgan reckons there’s a 40% chance of a recession in America this year. To help mitigate the impact of higher import taxes, Nike’s increased the price of its more expensive trainers. It remains to be seen how this will impact its top and bottom lines.
However, JD Sports sells other brands including some hot newcomers that are looking to disrupt the market (such as On). It has over 150 of them available on its online store. And the group’s successfully come through more difficult times before, including the pandemic. Revenue in its 2025 financial year was 85% higher than in 2021.
To help underpin future expansion, the retailer retains a strong balance sheet and it’s expected to generate £1.2bn of operating cash flow this year. I also remain optimistic that Nike will return to growth soon. Given that its brand’s so strong, I think it’s too early to write off the group. As today’s events have demonstrated, this should help the JD Sports share price.
For these reasons, investors could consider adding the UK sports retailer to their portfolios.
