JP Sports (LON: JD) share price has been in a strong downward trend in 2022 as concerns about growth continues. The stock dropped by more than 6% on Friday and reached a low of 94.25p, which was about 60% below the highest level this year. Its market cap has crashed to more than 4.85 billion pounds.
UK retail sales crash
JD Sports share price continued plunging after the latest UK retail sales data. According to the Office of National Statistics (ONS), the country’s retail sales dropped by 1.4% in September, which was lower than the median estimate of -0.5%. Retail sales crashed by 6.9% on a year-on-year basis.
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Meanwhile, core retail sales declined by 1.5% from September and by 6.2% on a year-on-year basis. These declines were worse than the median estimates of -0.3% and -4.1%, respectively. A drop in overall sales is often seen as a bearish thing for JD Sports and other retailers like Tesco and Ocado.
JD stock price has also crashed hard as demand for sports fashion drops. Indeed, shares of some of the biggest companies in the industry like Nike and Adidas have crashed by more than 20% this year. As we wrote in this article, Nike revenue rose by about 4% in Q1.
The most recent results showed that higher operating expenses were leading to lower profits. In a statement, JD Sports said that its revenue increased from over 3.8 billion pounds in the first half of 2021 to over 4.41 billion pounds in 2022. However, its profits declined from 364 million pounds to over 298 million pounds.
Still, there are two main reasons why JD Sports seems like a good long-term investment. First, despite the rising costs, the company is seeing strong demand for its solutions. Second, the firm has a strong market share in the US. As such, there is a likelihood that the strong US dollar will partially offset losses of the weak sterling.
JD Sports share price
The daily chart shows that the JD Sports share price has been in a strong bearish trend in the past few months. This decline saw it drop to the important support at 98.90p, which was the lowest level on May 26. It has crashed below all moving averages.
Therefore, while JD Sport’s fundamentals are strong, there is a likelihood that the stock will continue falling as sellers target the key support level at 80p.
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