JD Sports is one of Britain’s most recognisable sportswear retailers, but the stock market hasn’t treated it well in recent years. The group’s most recent trading statement showed like-for-like sales down 3.1% in the 13 weeks to 1 August.
Notably, its North American stores have performed particularly poorly, falling 6.8%. That matters because the region represented 38% of FY26 group sales, securing £4.8bn in revenue from brands such as JD, Hibbett, Shoe Palace, DTLR and Finish Line.
Management cut its 2026/27 adjusted pre-tax profit guidance to £700m-£800m, from £750m-£850m.
Yet despite the weak performance, I believe the market’s underestimating JD’s long-term strength – and I’ll explain why.
Why sales are under pressure
The immediate explanation is familiar. Consumers are being increasingly careful with discretionary spending, while sportswear remains a competitive and highly promotional market. JD’s chief executive, Régis Schultz, said the quarter reflected “consumer and footwear product cycle headwinds” and “incremental cost-of-living pressures.“
North America also faced a slower quarter for high-heat footwear demand and delayed back-to-school requirements.
Competition creates a second problem. Shoppers can now compare prices quickly and switch between specialist retailers, department stores and online marketplaces. Discounts may protect sales, but they can also pressure gross margins.
That’s the risk investors should watch, namely a weak sales period becomes more damaging when a retailer must sacrifice profit to clear stock.
Still, the headline decline doesn’t tell the whole story. Excluding standalone Finish Line stores, North American organic sales only fell 1% in the quarter. It’s still not great, but it suggests the company may be holding up better than the interim results indicate.
To reiterate that point, UK like-for-like sales rose 0.8% and Asia-Pacific sales increased 1.4%.
Why the recovery case remains alive
Rather than sit idly, JD Sports is actively working on a fix. Management says apparel and accessories are growing, while performance running and newer footwear styles are gaining momentum (no pun intended).
Online sales exhibit particular promise, up 2.6% in the latest quarter. That’s strong evidence that the retailer can still reach customers beyond the traditional store visit, even when footfall’s weaker.
The company’s also investing in convenience. In January, the footwear giant announced plans to let US customers search for and buy products through AI platforms in a single click, using Commercetools and Stripe.
That alone doesn’t create demand, but it certainly helps to increase brand visibility as shopping habits change.
My verdict
My view is that the North American weakness presents a skewed understanding of the actual results, leading to overinflated caution in the market. The group has scale, a broad brand portfolio and a sizable digital operation.
It’s understandable though, that investors want evidence this is just a cyclical slowdown rather than the early signs of a long, drawn-out correction. Therefore, it’s important for both shareholders and potential investors to keep on eye on these key indicators:
- Like-for-like sales in North America.
- Gross margin performance and promotional intensity.
- Online growth and store-based fulfilment.
- Whether the £700m-£800m profit outlook stabilises.
If they don’t improve, then the problem may be more structural than expected. Until the next trading update, we can’t say for sure. But in my opinion, I expect those metrics will improve and ignite a recovery. That’s why I think today’s price could be a bargain worth considering for value investors.
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Mark Hartley owns shares in JD Sports.
This story originally appeared on Motley Fool
