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Highlights

  • JD Sports shares surged up to 7.5% in early Friday trading, supported by Nike’s better-than-expected results.

  • Nike’s quarterly profit fell 86%, but beat forecasts and signalled stabilisation ahead.

  • Shore Capital sees improving wholesale trends as a potential positive for JD.

Shares of JD Sports Fashion PLC (LSE:JD.) jumped as much as 7.5% during early trade on Friday, lifted by renewed optimism surrounding its key supplier and strategic partner, Nike Inc. The UK sportswear retailer’s rally followed a better-than-expected quarterly update from Nike, which pointed to early signs of stabilisation despite a steep drop in earnings.

Nike reported a sharp 86% fall in quarterly profit to US$211 million, a result of aggressive discounting and inventory clearance. While the figures marked a significant year-on-year decline, they came in ahead of Wall Street estimates. Investor sentiment turned positive as Nike executives adopted a more confident tone regarding the near-term outlook, reassuring markets about efforts to restore growth momentum.

JD Sports, which has a long-standing wholesale relationship with Nike, is seen as particularly sensitive to fluctuations in the US giant’s performance. The improvement in sentiment around Nike is thus considered a key driver behind JD’s share price reaction, with the stock rising 4.73p to 86.43p during early trade on Friday.

Broker Notes Hints of Wholesale Recovery

Analysts at Shore Capital, commenting on Nike’s update, acknowledged the lingering challenges but also noted emerging positives.

"Overall, the double-digit sales decline for Nike has undoubtedly been a significant headwind for JD and there is still more work to do before the company sees a return to revenue growth and in continuing to clean the inventory position," the firm said.

"However, with this update, we do see early signs of an improving wholesale channel."

The wholesale recovery is seen as a crucial element for JD, which has faced pressure from reduced product availability and uneven consumer demand in recent quarters.

Nike Shares Surge on Strategic Reset

Nike’s own shares soared 10% in after-hours US trading, bolstered by management’s renewed focus on cost efficiency and a return to core sports performance categories. The company outlined plans to rebalance its supply chain and reduce costs, even as it acknowledged the headwinds posed by newly imposed US tariffs on Chinese imports — an issue expected to cost the company around US$1 billion this year.