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Investing.com -- JD Sports Fashion (LON:JD) plc saw its stock price drop more than 6% on Wednesday after weaker-than-expected first-quarter sales growth, particularly in the U.S. The company’s fiscal year 2025 results, however, were broadly in line with market expectations.
For FY25, JD Sports reported group sales of £11.5 billion, slightly surpassing the Visible Alpha consensus estimate of around £11.4 billion.
Adjusted profit before tax (PBT) came in at £923 million, aligning with the consensus of £921 million, while adjusted basic EPS stood at 12.4p, just above the expected 12.2p. The company proposed a total dividend of 1.0p per share.
In contrast, the company’s first-quarter performance for Q1 2026 posted a 2% year-on-year decline in like-for-like sales, falling short of the consensus forecast of a 1.1% decline.
By region, the UK reported LFL sales growth of 0.4%, outperforming the expected 2.2% drop.
In Europe, sales grew by 0.7%, exceeding the anticipated 0.2% decline. Sales in North America and Asia Pacific fell by 5.5% each, significantly higher than the consensus estimates of a 1.2% decline in North America and a 0.7% drop in Asia Pacific.
JD Sports addressed the potential impact of tariffs, stating it had modeled their effect on the business and found it to be non-material.
The company did not provide updated guidance for FY26 adjusted PBT but analysts suggest the consensus estimates may shift downward to the high £800 million range, from the previous forecast of around £900 million.
At the end of FY25, JD Sports reported net cash, excluding leases, of £52 million, higher than the RBC Capital Markets estimate of £22 million.
JD Sports expects organic revenue to grow between 2-3% per year, with space growth contributing approximately 3-4%. With the company’s like-for-like sales base expanding, its capital expenditures will focus on more targeted projects.
RBC Capital Markets analysts believe JD Sports will maintain its position as a preferred retail partner for major sportswear brands like Nike (NYSE:NKE) and Adidas (OTC:ADDYY), citing its strong retail skills and appeal to younger consumers.
In Europe and North America, the company has opportunities to expand its customer base and improve its warehousing efficiency.
Despite JD’s rapid expansion and its reliance on Nike, which has lost market share to Adidas and smaller competitors, execution risk remains high. The returns from JD’s acquisitions have not yet met expectations.