JD体育：这是一场马拉松，而非短跑

F25E7.10.10.021 May 2025160.00162.10/61.161,437.276M(12.9)18.6(31.5)05/2512001300140015001600 F26E83.121.2%4,2827,540(31.1)(41.6) RatingOutperformPrice TargetJD/.LNAdjusted EPSJD/.LN (GBP)OLDSource: Bloomberg, Bernstein estimates and analysis.JD Sports: A marathon not a sprintJD Sports reported their FY24 results yesterday. FY24 and Q1 were broadly in line.However, the stock was down c. -10% driven by US weakness (non-JD) and H2 weightedprofitability. We think JD Sports offers significant upside on a 12-24 months horizon butthere are 3 key challenges to owning JD Sports today:1) Management credibilityremainsa challenge, ranging from reporting dates, comms, restatements and guidance. We welcomethe introduction of Michael Armstrong to investors who provides visibility of the strength ofthe ‘bench’;2) Nike clearance continues to pressure on demand(covered by AneeshaSherman) as competitors (Footlocker) and Nike outlets continue to clear product. JD has gotlimited credit for buying very well, avoiding an inventory issue and maintaining gross margin.This clearance cycle feels never ending but management highlight this should come to anend by back-to-school. Innovation is yet to really feed through;3) Underlying consumerdemand remains volatile.The US has weakened and presents a risk in Q2 and potentially inH2. However, the UK is improving and EU is resilient.Putting these three together, we can see a pathway to normalised demand towardsthe end of the year and recovery through 2026. Management have taken action toimprove sentiment with the recent strategic update (less CAPEX, a new buyback, lowerexpectations & the Genesis option delayed).The stock is attractively valued at 6.8xNTM PE.We end up in line with consensus PBT in FY25 at £890m but +17-24% higher onFY26-28 EPS due to better margins, growth and buybacks.We think the risk reward isasymmetric at this point on a 12-24 month viewwith c. -15% earnings downside (at -5%LFLs) but significant upside on a multi-year view driven by continued execution, capital returnand re-rating.Investment ImplicationsWe rate JD Sports Outperform with a target price of £1.60 (72% potential upside), based onan average of a PE (10x) and EV/EBIT (8x), on our NTM+1 earnings estimates.See the Disclosure Appendix of this report for required disclosures, analyst certifications and otherimportant information. Alternatively, visit our Global Research Disclosure Website.First Published: 22 May 2025 04:00 UTC Completion Date: 21 May 2025 17:27 UTC 160.00 GBpF26E0.15--FinancialsRevenues (M)EBIT (M)Net Debt (Cash) (M)FCF (M)EBIT Margin (%) CAGR7.7%4.9%------Close DateEDMFYEDiv YieldEV (GBp) (M)PerformanceAbsolute (%)EDM (%)Relative (%)180p160p140p120p100p80p05/24 F24AF25E0.140.12----F24A11,4581,0493,864296.009.2 F25EF26E12,61913,2871,0091,1552,7172,319858.95568.098.08.7 DETAILSSUMMARY•JD Sports reported its FY24 results yesterday.FY24/25 results were in line with expectations. Revenue was in line at£11.4bn, gross margin in line at 47.8% and PBT at £923m. Q1 trading was also in line at c. -2% LFLs vs. a thin consensusin the context of a volatile and promotional environment. Given that we had the mid-term update in April, the update wasconsistent with the mid-term strategy update, highlighting lower CAPEX, delayed Genesis options and £100m buybacks.FY25/26 guidance had previously been given in April with growth in revenue helped by acquisitions adding +10% and spaceadding +4%. They also guided to PBT in line with consensus around £920m excluding any impact from tariffs and CAPEX fo£500m.•Q1 trading was in line with expectations but US weaker and UK slightly better.Q1 organic sales delivered +3.1%growth (+5.1% from space growth, -2% LFLs) and gross margin was in line with the previous period (48.2%, 48.6%ex. acquisitions). LFLs were broadly in line with a thin consensus. The market continued to be volatile and promotional,particularly online. JD drove the majority of growth with +4.7% OSG and -2% LFLs whilst complementary concepts wereweak at -1.8% OSG and -5.5%. North America was particularly weak with -5.5% LFLs vs. +0.7% in Europe and +0.4% inUK.KEY TAKEAWAYS FROM PRESENTATION•US weakness was non-JD.The US delivered -5.5% LFL declines in Q1-26. JD was up +2% but FinishLine was down -17%,Shoe Palace down significantly and Hibbett in line with expectations (so probably c. -2%). FinishLine is mostly online and ithas been impacted by promotions and JD under-investing as they want to focus on the JD brand instead. Shoe Palace hasbeen heavily impacted by immigration policies, with the Hispanic consumer really pulling back and much lower traffic instores. There has been a big impact across all business from product launches shifting back from April into May (c. 1-2%negative LFL impact).•Promotional environment shows no real signs of softening.There is still a lot of Nike (covered by Aneesha Sherman)discounting in outlets and Foot Locker (not covered) is still being semi-irrational on pricing. The