In 2024, JD Sports Fashion (LSE:JD) was the worst-performing FTSE 100 share. It lost 36% in value, meaning that as we started 2025, many investors were sitting on the fence. However, some also believed it was an undervalued gem.
So if an investor had snapped it up a year ago, here’s how it would have performed.
Lowering expectations
A year on, JD Sports is still in the FTSE 100 but has seen its share price fall by an additional 11% over the last year. This means that the £5k investment would currently be worth £4,450. This is an unrealised loss and would only be felt in the investor’s pocket if they sold the stock right now.
On the face of it, the share price falling by 11% means performance isn’t as bad as the year before. It’s also not taking the wooden spoon for 2025 either! However, with the index up 21% over the same time period, there’s still been some clear underperformance.
2025 didn’t get off to a great start with JD Sports cutting its full-year profit outlook and warning of a “challenging and volatile” market. The subsequent trimming of profit expectations and flat like-for-like revenue projections didn’t inspire much hope.
In November, the company reported declining sales across major markets and signalled profits could be at the lower end of market expectations for the fiscal 2026 period. In terms of an explanation, the CEO flagged up “weak macro consumer indicators”.
The outlook for 2026
The Q4 trading update suggests the stock isn’t entering 2026 with any positive momentum. We should receive a financial release in January regarding the festive holiday period. I think this will dictate the share price direction for the coming few months.
It’s true that the price-to-earnings ratio is now just 6.76. This is well below the FTSE 100 average and below my fair value benchmark of 10. Yet the ratio was also attractive at the start of 2025, when some might have bought it on the basis that it was undervalued. It serves as a good reminder that stocks can remain cheap (and get even cheaper) before any kind of recovery.
JD Sports could get a boost from its increasingly geographically diverse footprint. It has grown rapidly through acquisitions including Finish Line, Hibbett and Courir. This gives it wider access to markets such as the US and France. Looking ahead, it should generate a significant portion of revenue outside the UK, which is a positive.
One risk I see is that the company could drop out of the FTSE 100 due to a reshuffle later this year, based on a falling market-cap. This would be a reputational hit for the company.
On balance, I do understand why some would have thought JD Sports would have been a smart buy at the start of last year. Yet even with the low valuation now, I still think it has more problems than solutions in the tricky retail environment.
As a result, I think investors can find better options elsewhere.
