JD Sports Fashion PLC

Needham reiterated its Hold rating on Nike and cut its earnings estimates ahead of the company's fiscal first-quarter results on Oct. 1 after the close, warning the stock could keep falling. Analyst Tom Nikic cited soft demand trends, high inventory levels, intense promotional activity and unfavorable competitive dynamics. He pointed to two negative developments since Nike's fourth-quarter earnings call in late June: weakened U.S. back-to-school demand that led to missed sales targets and lower guidance at Dick's Sporting Goods, which owns Foot Locker, and at JD Sports, and two key wholesale partners in China saying they will stop selling Nike products online. Needham lowered its fiscal 2027 earnings per share forecast to $1.64 from $1.74 and cut its fiscal 2028 estimate to $1.80 from $2.00, and the firm does not have a price target on the stock. Nike shares closed at $36.05 on Wednesday and are down around 0.8% to $35.77 so far today, with the stock down almost 50% in the last 12 months and over 44% year-to-date.

JD Sports Fashion reported weaker sales and profits for the six months to August 1, blaming cost-of-living pressures for weighing on demand among its younger customers. Sales came in at £5.9 billion, about 0.7% less than the same period a year ago, driven by a 1.7% decline in North America, its biggest market, and a 1.6% fall in the UK, partly offset by sales jumping by more than a 10th in the Asia Pacific region. Adjusted pre-tax profit tumbled by a fifth to £282 million. Chief executive Regis Schultz described a resilient performance against a challenging backdrop of consumer cost-of-living pressures, footwear product cycle headwinds and a highly promotional market, and the retailer cut its full-year profit outlook last month to between £700 million and £800 million, down from a previously guided range of £750 million to £850 million. JD Sports had 4,766 stores worldwide in August, more than 100 fewer than a year earlier, and analysts said its trading is being hurt by weaker sales trends at Nike, one of its most significant brand partners.

Dick's Sporting Goods shares plunged more than 22% at the open on Tuesday after the retailer warned of continued pain from a promotional environment in footwear and athletic apparel. The update confirmed a similar warning from JD Sports last week about weaker second-half growth in the sporting goods category. UBS analyst Michael Lasser said the key question is whether these conditions persist and how that will affect earnings power. Barclays kept its Overweight rating, citing strength in the core Dick's business, while Citi remained bullish but called the lowered EBIT margin and Foot Locker sales guidance a big negative surprise. The stock hit a new 52-week low of $136.16 during the session.

RBC Capital Markets has cut profit forecasts for H&M and JD Sports Fashion PLC, citing sluggish consumer demand in Germany as a growing risk for European retailers. The bank lowered its earnings per share forecasts for H&M by 2% to 3% for the 2026 and 2027 financial years, citing lower like-for-like sales assumptions and higher operating costs, and reduced its price target to SEK175 from an unspecified previous level while maintaining a sector perform rating. For JD Sports, RBC cut earnings forecasts for the 2027 and 2028 financial years by 6% and lowered its price target to 95 pence from 100 pence, after the retailer reported softer-than-expected second-quarter trading driven by slower US footwear sales. RBC noted that store sales in German fashion retail have fallen almost 4% year to date while online sales have risen 4% year on year, a trend it expects to continue given Germany's e-commerce penetration lags other major markets. The bank said Next and Zalando are best placed to benefit from the online shift, while Action and H&M carry more exposure to German stores, and JD Sports plans to close about 40% of its roughly 100 German stores as parts of the market appear to favour single-brand retailers over multi-brand stores.

Shares of British sportswear retailer JD Sports fell about 2% on Wednesday after Nike signaled that its turnaround remains a work in progress, projecting further revenue declines amid a steepening sales slump in China. Nike posted a 1% revenue decline in its fiscal fourth quarter and warned of additional drops through the first half of fiscal 2027, as the company continues to wrestle with stiff competition and elevated inventory levels. Sales in Greater China fell 17% on a constant-currency basis in the quarter, steepening from a 10% decline in the prior period, though the result was slightly better than the 20% drop Nike had projected three months ago. North America revenue rose 3% in the quarter as Nike benefits from rebuilding wholesale relationships. On an adjusted basis, Nike earned 20 cents per share during the quarter, topping analyst estimates of 13 cents, according to LSEG data.