Source: Sharecast
Bernberg highlighted plans to broaden JD's product range, optimise stores and step up long‑overdue investment in its online channel as it said many of the firm's recent challenges were largely external, pointing to a slowdown across the sportswear market, weaker demographics, pressure on disposable income among its predominantly Generation Z customer base and a loss of brand momentum at Nike, which accounts for around a third of group revenue.
The German bank said these headwinds were compounded by M&A distractions and slower progress in tech and online. However, Berenberg noted that the industry structure remained intact, with major sporting‑goods brands still relying on wholesale distribution for more than 60% of revenue and JD retaining its position as the leading global distributor.
Berenberg said JD's valuation remained undemanding at a 7x price-to-earnings ratio, with a 12% free‑cash‑flow yield and a rolling £200m buyback worth around 5% of market capitalisation. Its price target of 155p offers "significant upside", with a blue‑sky scenario of 211p.
Berenberg added that JD had entered a post‑M&A phase and expected to track low‑single‑digit sportswear market growth over the medium term. Against that backdrop, the group was pursuing self‑help across product assortment, store refurbishments, website and app development, customer experience and logistics. Berenberg said JD had opportunities to expand apparel, diversify ranges and cater to sports fashion, streetwear, lifestyle and outdoor trends, while management remained focused on cost control, capex discipline and free‑cash‑flow generation.
Reporting by Iain Gilbert at Sharecast.com