JD Sports has delivered a resilient set of full-year numbers, with the standout being a clear improvement in North America and a 36% jump in free cash flow to £462m.
Investors will hope today’s figures show JD Sports is joining a small cohort of underperforming FTSE 100 stocks that are showing signs of stabilisation after a prolonged rocky period.
JD Sports shares rose 4% after reporting that total sales rose 11.7% to £12.66bn, with organic growth of 2.1%. This may be seen be some as a respectable result given the tough consumer backdrop. LFL sales were -2.1%, in line with guidance.
“JD Sports hasn’t kicked off the year in style, but there were early signs of improving trends in its largest region, North America. On the face of it, total sales growth of 11.7% in a tough retail market looks impressive,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“But stripping out the impact of its Hibbett and Courir acquisitions, organic sales growth came in at a more slender 2.1%. The Middle East conflict hasn’t had a direct impact on JD Sports so far, given its lack of presence in the region, but there’s potential for it to weigh on consumers’ confidence and spending power going forward if energy prices remain elevated.”
As Chiekrie alludes to, the most encouraging signal is that North America, the group’s largest region at 38% of sales, returned to LFL growth in Q4 after steady improvement throughout the year.
Organic growth there came in at 3.2%, with online up a punchy 12.2% and apparel sales rising around 22%. Excluding the standalone Finish Line stores being wound down, North America LFL was positive at +1.2%.
Europe also pulled its weight with organic growth of 4.2% and apparel up around 10%, while Asia Pacific delivered 8.5% organic growth and exited the year with positive LFL momentum. The UK was the soft spot at -2.5% organic, with the ‘fewer, bigger, better’ store strategy still bedding in.
Investors will be pleased to see that despite ongoing concerns about the growth trajectory, JD are stepping up capital returns. The dividend rises 20% to 1.20p, and a £200m rolling annual share buyback has been launched, alongside a new three-year cumulative free cash flow target of more than £1.4bn through to FY28.
But the outlook is still a concern. The demand picture is far from certain, and JD’s reliance on Nike products is likely to be a headwind in the near term.
“JD Sports is heading into FY27 with little growth expected, as external pressures continue to weigh on the business,” said Yanmei Tang, AVP at Third Bridge.
“Our experts say factors like US tariffs, geopolitical tensions and weak consumer confidence are all outside JD’s control but are hitting demand. At the same time, Nike’s struggles are a key risk, given JD’s reliance on the brand.”
Yang continued to say “that in a no growth environment, JD’s focus will be on costs and efficiency. This includes using more automation and tightening operations to protect margins.”