Interim results from JD Sports Fashion PLC (LSE:JD., OTC:JDSPY) did "not make for pleasant reading", one analyst said, but did not change the dial for many investors.
Revenue and gross margins had already reported, with the "new news" being adjusted profit before tax of £351 million, said analyst Alison Lygo at Deutsche Bank, adding that the statement "contains little in the way of surprises".
This represents 40% of the current full-year consensus forecast, she said, with the FTSE 100-listed company not yet having provided a guidance range this year.
Rather than publicly adjust its outlook, JD has simply confirmed that it is happy with market expectations, which Lygo noted have continued to shift down, now at £878 million, down 6% since before Donald Trump's "liberation day" in April.
She said it was usual from JD Sports not to provide any explicit comment on current trading, though the company said it expects little impact from US tariffs this year, with direct impact immaterial and the majority of store inventory brought into the US by brands ahead of tariffs ramping up.
Panmure Liberum analyst Anubhav Malhotra said JD management expecting limited impact from US tariffs was positive new but the results "do not make for pleasant reading" as like-for-like sales were down 2.5%, gross margin shrank 40 basis points and adjusted PBT fell 13.5% despite two acquisitions.
He said after the shares have dropped around 8% in the year to date, trading on "attractively low multiples" of 4.1 times on an EV/EBITDA basis or a p/e ratio of 6.9x with a high single-digit FCF yield.
"We still see potential downside risks from a slowing US consumer demand environment particularly for its Community Concepts fascias, in a footwear market which is still in transition."
In its statement, JD stressed that there is a "fundamental shift in the global footwear product cycle" underway, with many of the biggest-selling footwear lines now at the 'end of cycle' stage, where demand slows because the product has been in the market for a while.
At the same time, brands are rolling out newer "franchises" (fresh lines or updated models), but these are still at an early stage and have not yet scaled up to replace the sales volumes of older products.
House broker Peel Hunt noted a pleasing US performance: "brand recognition is up significantly and excess Nike product should soon be sold through. This should usher in a calmer period for the sector, and with JD remaining a supplier partner of choice, we believe it can win keep winning share."
Its forecasts remained unchanged today, with analyst Jonathan Pritchard saying estimates are "starting to look much more underpinned".
"Of course, a lot depends on the Nike pipeline and consumer confidence over Christmas, but the shares appear priced for disaster, or at best, disappointment, and we do not think that’s at all the likely outcome."
Indeed, Russ Mould at AJ Bell said investors are "having to work out whether sluggish demand at JD Sports, reflected in lower like-for-like sales, is part of a cyclical or structural trend".
This means either waiting for a more positive backdrop to arrive, or it could mean "a waning of the athleisure trend which saw people wearing the same outfits for the gym, relaxing at home and socialising" that has supported JD over several years.
"A larger than normal second-half weighting is another worry – with the risk that the company ends up having to downgrade guidance if the second half doesn’t make up the shortfall."