JD Sports Fashion PLC (LSE:JD.) has long ridden in Nike’s slipstream. With almost half its revenue tied to the swoosh brand, JD’s share price has echoed every twist and turn in Beaverton, Oregon.
Yet the stock’s modest 8× forecast price-to-earnings multiple for calendar 2025 suggests investors are still wary of a company “transitioning through a period of lower returns, but the outlook for FY27 looks more promising,” as Richard Chamberlain’s team at RBC puts it.
Indeed, after a pandemic-fuelled surge, JD’s like-for-like sales are forecast to dip 2% this year, dragging profit before tax down slightly. But global diversification, just 25% of sales in the UK and Ireland versus 36% in the US and 34% in the rest of Europe, should cushion regional headwinds.
A leaner supply chain is coming on-stream too: Heerlen’s automated European distribution centre goes live this summer, with US warehousing set to follow in due course.
Nike’s own product reset is a lynchpin for JD. After overstocked Air Jordan and Air Force 1 lines, the running franchise has finally caught a tailwind: the Vomero 18 alone has topped US$100 million in sales, and new launches are lined up through October. That should help JD turn marginal profit headwinds into a gentle improvement in operating margin.
At 86p, JD trades well below its 95p discounted-cash-flow valuation (up from 90p).
For those keen to tap into Nike’s recovery without paying a retail premium, JD remains an appealing “outperform” call.
The toughest like-for-like comparison of the year arrives in the autumn, but with inventories rebalanced and Nike’s product pipeline in better shape, next year’s results may finally let JD sprint ahead.