Up 6.4% already, the FTSE 100 is having a decent start to the year. Yet, as always, not all Footsie stocks are doing so well.
According to my data provider, the worst-performing share in 2025 is JD Sports Fashion (LSE: JD). It’s down 16.5% and is trading for 80p (it was above 200p at the start of 2022).
Unfortunately, I already hold this one, having invested in November at 97p. I hoped I was getting in somewhere near the bottom, but I was wrong. The knife kept falling.
Should I double down at 80p? Let’s dig in.
Tough market backdrop
For many years, JD Sports grew strongly as it expanded internationally and cemented its reputation as the ‘King of Trainers’. Even today, it’s still known for its wide selection of brands and the latest fashionable trends and styles in sportswear.
However, soaring inflation and a cost-of-living crisis has hit JD hard in recent years. Many people just don’t feel as flush as they once did, forcing retailers to engage in price wars to lure spend-shy shoppers.
JD has chosen to maintain its premium sportwear image by not engaging in discounting. While that pricing discipline is good for the gross margin, it has impacted top-line growth and resulted in two weak Christmas trading periods on the trot.
Moreover, its once-enviable close relationship with Nike has become a bit of an Achilles heel. The US athleisure giant took its eye off the ball in recent years and lost market share to more nimble brands like Hoka and Roger Federer-backed On.
Clearly, interest rate cuts would help matters here, but it’s unclear when things will improve. Consumer and business confidence is at rock-bottom in the UK, with no sign of the dark clouds parting yet. So there is a risk that JD’s UK sales could weaken even further this year.
International operations
So, why on earth did I choose to invest in the first place? Well, one reason is that I like JD’s international growth prospects over the next few years. It has a growing presence in Asia and parts of Europe like Spain and Poland (both economies have been growing strongly lately). Only around a third of sales come from the UK and Ireland.
Also, JD has beefed up its store count in the US with the recent $1.1bn acquisition of Hibbett, an Alabama-based sportswear retailer. This acquisition added over 1,000 stores across 36 states, particularly strengthening JD’s presence in the US.
Finally, there is new management at Nike, which is reducing investment in its own direct-to-consumer channel. This renewed focus on selling more through wholesale partners like JD should ultimately benefit the FTSE 100 firm (Nike trainers are higher-margin). I think demand for Nike products will eventually recover.
My decision
On paper, the stock looks dirt cheap. It’s trading at just 6.4 times earnings for the current financial year. Even if earnings come under pressure, that looks like a decent margin of safety to me.
I have to think most of the bad news is being priced in here. Therefore, I think JD shares are worth considering at 80p.
The company’s Q4 2025 trading update is due in March. If there is no alarming guidance given for this year, I may buy more shares.
This post was originally published on Motley Fool
