On 24 September, the JD Sports Fashion (LSE:JD.) share price closed 0.7% lower, at 87.9p, after the group released its results for the 26 weeks ended 2 August. Compared to the same period in 2024, the sports and leisure retailer reported a 20% increase in sales and a 9.5% rise in pre-tax profit.
But look closer…
However, this includes the full six-month impact of two acquisitions. On a like-for-like basis, sales were down 2.5%. The lukewarm response of investors appears to reflect concerns about this lack of top-line growth. Although the group’s share price has risen 57% since recording its 52-week low in April — when President Trump’s trade policy rocked the world’s markets — it’s still 35% lower than where it was in October 2024. The group now says it expects “limited impact from US tariffs this financial year”.
Today (1 October), the stock’s changing hands for around 96.5p – nearly 10% higher than before the group’s interim results were announced. Some of this could be due to the commencement of a £100m share buyback programme. Alternatively, it might be a case of investors thinking that the stock still represents excellent value for money.
JD Sports says its on track to report full-year earnings in line with the analysts’ consensus of 11.68p per share. This means its currently trading on 8.3 times forward earnings. Looking ahead to its 2028 financial year, the multiple drops to 6.7. Both of these figures look cheap to me.
Across the pond
And there’s another reason why I think there’s value in the group’s share price.
Yesterday evening, on the other side of the Atlantic, Nike released its first-quarter trading update. It’s believed that the American sportswear giant accounts for around half of the British retailer’s sales. That’s why their share prices appear closely correlated.
Recently, Nike has lost its way. A lack of innovation, increased competition and a failed attempt to cut out wholesalers has resulted in its share price tanking. However, during the three months to 31 August, its sales and earnings per share beat analysts’ expectations. A return to its roots also appears to be working.
However, it isn’t out of the woods yet. Despite some hefty price increases, its gross profit margin fell compared to the same period a year earlier. And it’s still suffering from increased tariffs on imports from Asia where the majority of its products are made.
The company has warned that “progress will not be linear”. However, I think there are enough green shoots to suggest the worst might be over.
Closer to home
And this could be good news for JD Sports. But the British retailer is still heavily exposed to a domestic economy that appears sluggish. And it’s only managed to avoid the worst of Trump’s tariffs through stockpiling. This is no longer an option.
However, I remain optimistic. The group has a strong brand and its balance sheet remains healthy. It expects to be in a net cash position (after leases) at the end of its current financial year. And it’s important to remember that JD Sports isn’t totally reliant on Nike. It sells all of the other brands that have been a thorn in the side to the American icon.
For these reasons, I think JD Sports is a stock to consider.
