Profits fell at JD Sports Fashion (JD.) in the year to January 2026 as hard-pressed consumers cut back on the latest snazzy sneakers, tracksuits and replica shirts. The FTSE 100 retailer also reported a 2.3% drop in like-for-like sales for the weather-blighted first quarter of FY27.
Which begs the question, why did shares in the athleisure giant rally in early deals today?
Well, investors focused on a return to growth in North America, JD Sports’ biggest region, in Q4.
The Bury-based company also demonstrated confidence in its medium-term prospects by bumping the dividend up 20% to 1.2p.
JD Sports clearly believes its shares are undervalued. The company recently kick-started a fresh £200 million share buyback supported by FY26’s near-40% rise in free cash flow.
Uphill running
JD Sports’ adjusted pre-tax profits fell 7.7% to £852 million in a difficult FY26 for the athleisure industry. That was slightly better than analysts had feared.
Total sales rose 10.5% to almost £12.7 billion, boosted by full-year contributions from the Hibbett and Courir acquisitions.
In North America, JD Sports’ sales trends sequentially improved through the year. This culminated in a return to like-for-like growth during peak trading in Q4.
Elsewhere, like-for-like sales were down 1.2% in Europe in FY26. And organic sales fell 2.5% in the UK against a ‘tough consumer backdrop’, with JD’s brick-and-mortar stores suffering from lower footfall.
What did Schultz say?
Under-fire CEO Regis Schultz said: ‘We delivered a resilient performance, achieving organic sales growth of 2.1% despite tough market conditions.
‘Our deep understanding of our customers and lifestyle trends give us a clear view of how they want to shop and spend, allowing us to consistently deliver the right products, in the right places and at the right prices.
‘This customer‑led focus, alongside disciplined cost and capital management, supported a 36% increase in free cash flow.’
Schultz added: ‘Whilst we continue to expect muted market growth in FY27, we remain confident in JD Group’s medium‑term trajectory, underpinned by our strong brand partnerships and agile, multi‑brand model.’
JD Sports Fashion is a great business. But the shares have shed more than 60% of their value over the past five years and we see no rush to own them right now.
The youthful shoppers JD Sports targets are feeling the pinch and struggling to find employment. As a result, they are cutting back on the latest footwear and apparel. Unsurprisingly, management expects ‘muted market growth’ in the near term, even with the FIFA World Cup looming.
Furthermore, the impact of the Middle East conflict on consumer spending means JD Sports provided a wide FY27 profit guidance range of £750 million to £850 million. Even at the top of the range, that implies profits will go backwards this year.
And if JD Sports needs to discount product to remain competitive, that would squeeze gross margins and drive further earnings downgrades.
Read the press release here: https://www.jdplc.com/investor-relations/ir-overview/default.aspx
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