In a dramatic turn of events on the London Stock Exchange, JD Sports Fashion saw more than a fifth of its market value evaporate in a single day. The catalyst for this precipitous fall was a sobering revenue warning from its largest brand partner, sportswear behemoth Nike.
The sell-off was both swift and severe, wiping approximately £900 million off JD Sports' market capitalisation. The retailer's stock was the worst performer on the FTSE 250 index, closing down a staggering 21.6% at 126.75 pence.
Nike's Forecast Spooks Investors
The root of the panic stemmed from Nike's after-hours announcement to its investors. The global brand revealed it anticipates a low single-digit percentage decline in its revenue for the second half of its financial year. In response, Nike's management unveiled a new strategy to slash costs by a substantial $2 billion over the next three years.
This news from Oregon sent immediate shockwaves across the Atlantic, directly impacting JD Sports, which is heavily reliant on Nike products. The market's reaction highlights the deep interdependence between major retailers and their key suppliers.
A Broader Sector-Wide Rout
JD Sports was not the only casualty. The fear contagion spread to other listed sports retailers, indicating a sector-wide reassessment of risk. Smaller rival Frasers Group also saw its shares dip by 2.5% following the news.
The dramatic plunge serves as a stark reminder of the fragility of retail stocks in the face of shifting forecasts from industry giants. All eyes will now be on JD Sports' next trading update, expected in early January, for its response to this significant challenge to its outlook.
