The JD Sports activities Vogue (LSE: JD.) share price has misplaced round 65% since late 2021. After an upbeat buying and selling replace on 9 April, JD shares began selecting up and it seemed like a restoration is perhaps on the playing cards

However then got here the precise outcomes on Wednesday (21 Might). The share price fell over 10% on the day, pulling again simply a few p.c Thursday.

Shareholder returns

Boosting confidence within the firm’s money prospects, CEO Régis Schultz mentioned: “Our focus on increasing shareholder returns is demonstrated by paying FY25 dividends of £52m, up 11% on the previous period, and after the period end, the commencement of a £100m share buyback programme.”

The dividend yield remains to be solely round 1.2% although, so it’s perhaps not one to retire on simply but.

Why did the share price fall on the day? The CEO additionally spoke of “uncertainty surrounding the impact of US tariff changes.”

Different retailers have spoken of tariffs, so that they’re nothing new. However JD was extra particular than most on the methods it sees its enterprise presumably struggling. There’s quite a lot of threats, however there appear to be two principal ones.

US demand hit

Firstly, there’s a transparent potential affect on costs for US prospects, with round 40% of JD’s gross sales coming from the USA. That, mixed with weakening client confidence, might hit demand. The agency sees this as the most important hazard.

Additionally, JD’s model companions souce a lot of their merchandise from South East Asia, the place tariffs might additionally hit prices. Provide chain adjustments might assist mitigate this class of injury.

I’m undecided issues are any worse than for different firms on this enterprise. It’d simply be the precise clarification that spooked the market. But it surely’s good to see shareholder infomation prioritised over any potential short-term price hit.

What to do now?

The ‘US vs everyone’ commerce battle appears more likely to push up world inflation and trigger some hurt to firm earnings. However I feel it’s a mistake to base investing selections on that reasonably than long-term well being and valuations.

On that rating, I feel the unfavourable response this week might change into a mistake.

Forecasts counsel a 2025 price-to-earnings (P/E) ratio of 12, which could appear honest given the yr forward. However they’d drop it shut to simply seven by 2027. That appears low-cost. But it surely is determined by whether or not the underlying enterprise mannequin can maintain increasing as hoped.

Full-year outlook

JD didn’t provide any particular steering replace with these outcomes. However the first quarter did go in keeping with earlier steering. April’s replace recommended revenue earlier than tax for the total yr ought to be in keeping with the forecast analyst consensus. And I count on which means the consensus will probably be maintained, at the very least for now.

So how low may the JD share price go? I’m optimistic that it may not be a lot decrease and we might be across the backside now. Regardless of the dangers, I feel long-term buyers ought to be contemplating it at as we speak’s valuation. But it surely is perhaps clever to count on slower future earnings progress.