JD Sports (LON: JD) share price had a tough performance in 2022 as the sports and fashion business struggled. The stock plunged by more than 43% in 2023, making it one of its worst years on record. So, will the shares rebound in 2023?
Sports apparel struggled in 2023
JD Sports share price has been under pressure in the past few months as the industry struggles. Indeed, sports apparel retailers like Adidas, Nike, and Anta Sports plunged by double-digits during the year. This decline happened despite the World Cup boost.
JD Sports faced numerous challenges. First, as inflation soared, most people continued to focus on consumer staples instead of discretionary products. As a result, its group results were not all that good. The most recent results shows that the company’s revenue in the first half rose to 4.4 billion pounds.
However, as costs rose, the firm’s profit before tax dropped to 383 million pounds. Earnings per share plunged to 5.23 pence, as I wrote in this article.
Still, there are several possible catalysts for the JD Sports share price for 2023. First, there are early indications that inflation in its key markets is easing. Data published last week showed that US and UK inflation pulled back slightly in November. Therefore, if the trend continues in 2023, the company will likely have a better year.
Second, the company is restructuring its operations. This week, it decided to offload 15 fashion brands to Frasers in a $58 million deal. The sale came as the CEO focuses on the company’s business expansion. International growth will likely help the company diversify its revenue stream.
Further, JD Sports has a strong balance sheet, with over 7.7 billion pounds worth of assets compared to over 5 billion worth of liabilities. Its working capital is worth over 1 billion pounds.
JD Sports share price forecast
The daily chart shows that the JD Sports stock price has been in a downward trend in the past few months. This sell-off saw the stock drop from a high of 235p in November 2021 to a low of 90p in 2022. It has recovered modestly in the past few weeks and managed to move to the 25-day and 50-day moving averages.
The stock remains slightly below the descending trendline shown in blue. It has also formed what looks like an inverted head and shoulders pattern. Therefore, the stock will likely have a bullish breakout as buyers target the key resistance point at 150p.
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