Worst behind them? JD’s recent 1H results reflected the tough trading environment and NIKE’s headwind from its Reset strategy, with innovation volumes not high enough to offset the planned reduction in key historic franchises (Jordan, Dunk & AF1). With NIKE past its most disruptive quarter (4Q25 to June), momentum should improve as it shifts into the next stage of its reset - ‘Sports Offensive’. NIKE is collaborating more with Wholesale and guidance is for this channel to return to modest growth in NIKE’s FY26 (June 26 Yr end). NIKE’s Spring order book is up YOY and, as one of NIKE’s leading partners, this bodes well for JD in 2026 as it continues to take market share in the US & Europe, with easier comps from 2H (see Figure 2).
Supply chain investment poised to unlock efficiencies. Heerlen RDC has launched automation for store replenishment in 2H and is key to unlocking high single digit European margins. Along with Shoe Place, Morgan Hills (West Coast US DC) will go live with JD/Finish Line by year end.
Forecast housekeeping. We nudged down FY26E/FY27E PBT by 3%/2%, bringing our forecast more in-line with consensus.
Undemanding valuation (CY26E PE 7.3x) more than reflects short-term concerns over tariffs and the global economic slowdown, in our view, but is overlooking the fact that JD is likely to return to profit growth in FY27E. NIKE’s reset seems to be gaining momentum. JD has efficiency benefits to come from improved distribution capabilities, its focus on driving better efficiency generally and integrating its recent acquisitions. JD is highly cash generative, with a leading global market position, and we believe it has attractive long-term US and European growth opportunities which are being overlooked. Risk/reward has shifted to the upside, in our view.
