JD Sports Fashion PLC (LSE:JD., OTC:JDSPY) drew a cautious response from UBS and Shore Capital after weaker second-quarter trading prompted the retailer to cut its full-year profit guidance, with analysts highlighting a sharp deterioration in North America and continued softness in footwear.
UBS retained its Neutral rating and 86p price target, warning that the guidance downgrade was likely to weigh on sentiment and could trigger a de-rating, particularly as JD typically generates the majority of its profits in the second half.
Shore Capital was similarly cautious, maintaining its Hold recommendation and 75p target price while cutting its profit forecasts by around 9%-10% across the forecast period.
JD shares slumped nearly 15%, trading as low as 78.48p before midday trade.
UBS said JD’s 3.1% decline in like-for-like sales in the second quarter was below both Visible Alpha consensus expectations for a 2.0% fall and its own forecast for a 2.2% decline.
The biggest disappointment came from North America, where like-for-like sales fell 6.8%, compared with UBS expectations for a 1.0% decline. Europe performed somewhat better than expected, with sales down 2.7% against the broker’s forecast for a 3.5% drop.
JD cut its forecast for profit before tax and adjusting items for the year to January 2027 to £700 million-£800 million from £750 million-£850 million, although free cash flow guidance remained unchanged at £460 million-£520 million.
Shore highlighted North America as a key concern. Organic sales in the region fell 4.5% and like-for-like sales dropped 6.8%. Shore said weakness remained even after allowing for the planned decline in Finish Line as stores continue to be converted to the JD brand.
It added that JD’s rate of decline appeared worse than that seen at some apparel retailers and major brands including Nike and Adidas, raising questions over potential market share contraction.
The UK was a relative bright spot, returning to like-for-like growth of 0.8%, helped by FIFA World Cup demand and favourable weather, although Shore said the underlying market remained weak.
Shore cut its FY2027 adjusted pre-tax profit forecast to £675 million from £748 million and reduced FY2028 and FY2029 estimates by about 9%.
However, it pointed to gross margin remaining in line with expectations, unchanged free cash flow guidance and continued shareholder returns through JD’s £200 million share buyback. Shore said the shares still offered value on its revised forecasts and therefore kept its Hold rating and 75p target unchanged.
