London broker Peel Hunt has downgraded its forecast for JD Sports ahead of the company’s full-year results next month due to short-term industry issues.
Peel Hunt cut its projected profit before tax and earnings per share for JD Sports by three per cent for the financial year 2026.
The broker attributed the downgrade to an overhang of Nike stock, which “is likely to persist deep into JD’s [next financial year].”
JD’s American revenue is particularly reliant on Nike footwear, but demand for the latter has faltered over the past year.
Last week, shares in Nike slumped to a five-year low after it reported a steeper-than-expected drop in fourth-quarter revenue – its fourth straight quarter of declining sales.
Nike has struggled with a post-pandemic shift away from athleisure, as well as competition from upstart trainer brands Hoka and On.
The result is a huge excess of ‘Classic’ footwear franchises: Air Force 1, Air Jordan 1, and Dunk.
“Simply put, there is an awful lot of stock left to shift, and consequently, the whole industry margin structure is impacted,” Peel Hunt analysts said.
“JD will not participate in heavy discounting, so while its gross margin should be robust, it is likely its Nike sales will suffer,” analysts added.
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