The first half of 2024 was tough for shareholders in ( ). The retailer’s share price fell by more than 20% on 4 January, after management warned of softer demand and cut profit guidance for the year. The shares haven’t recovered yet.
But the company has a long history of strong growth and is continuing to expand in the huge US market. Reassuringly, in my view, management says that trading so far this year has been as expected. Will JD shares stage a comeback during the second half of this year? I’ve been taking a look and here’s what I think.
Why I’m expecting a recovery JD Sports sales rose by 4.1% to £10,542m last year. But higher costs and more promotional discounting meant that its adjusted fell by 8% to £917m.
Given the tough consumer backdrop, I don’t think these were terrible numbers. But they didn’t show the growth investors have come to expect from this business. A sales slowdown at key supplier wasn’t helpful either.
The US firm has been criticised for a lack of product innovation and exciting new launches, and is facing increased competition from newer brands. My view on this situation is that we’re probably close to the low point in the economic cycle. At some point, consumer spending will recover somewhat.
My guess is that Nike – one of the biggest global brands in sports – will also find its mojo again. When this happens, I think we could see a strong recovery in profits for JD Sports. suggest JD’s pre-tax profit could rise from £917m .
