Shares in JD Sports Fashion (JD.) rallied 5.5% to 82.5p after the struggling sportswear retailer launched a fresh £200 million buyback for FY27.
This latest buyback from the FTSE 100 retailer demonstrates the board’s confidence in the company’s cash flows and scope for ongoing market share gains.
It also suggests management believes JD Sports is undervalued on a single-digit multiple of forward earnings. The stock is down 50% on a five-year view amid trading and tariff-related headwinds.
| Share price: 82.5p (+5.5%) | PE: 7.1 |
| Market cap: £3.9bn | Yield: 1.4% |
The sports, fashion and outdoor brands seller said the first tranche of the new £200 million buyback is expected to complete no later than the close of H1 on 31 July 2026. The second £100 million tranche will follow in the second half.
‘The purpose of the programme is to reduce the share capital of the company,’ explained JD Sports.
Volatile backdrop
On 21 January, the self-styled ‘King of Trainers’ maintained FY26 profit guidance despite encountering a ‘volatile’ Christmas consumer backdrop. Analysts expect pre-tax profits to come in at £849 million, implying an 8% drop from last year’s £923 million.
Investors can also expect to see a 50 basis point decline in FY26 gross margin. This is largely due to online price cuts to shift stock with cash-strapped consumers grappling with cost of living pressures.
North America returns to growth
Group like-for-like sales softened 1.8% in the nine weeks to 3 January 2026, with an improving sales and a return to growth in North America offset by weaker trends in Europe and the UK.
Led by CEO Regis Schultz, JD Sports said it was targeting around £400 million in free cash flow for FY26, having completed £200 million worth of buybacks in the year.
Announcing a share buyback typically prompts a bounce in a company’s stock price.
JD’s latest capital returns promise has done the trick and demonstrates management’s confidence in the company’s cash flows and long-run growth potential.
However, investors should be aware that buybacks add no economic value. Earnings per share and the stock price increase because there are fewer shares in issue, pure and simple.
Read the press release here: https://www.jdplc.com/investor-relations/results-centre/default.aspx
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