Are JD Sports Shares (LON: JD) Set To Break Out After Rocky 2024?

Investors in the retail sector have been on a rollercoaster ride with JD Sports shares (LON: JD) this year. Following a significant profit warning in January the stock had dropped 37% in a little over 1 month, hitting both 52 week highs and lows around in a relative short time-frame. Volatility was definitely elivated.

Since those early February lows however, the JD share price has made a few attempts to break out above 130p, only to fall back. With today's early price action pushing the stock to 131p, a look at the chart will tell you this level could be important to hold. From the February lows, the latest close also reflects more than a 25% gain, so the question as to whether JD holds this level or not could dictate in part some of the future momentum.

Despite this recent recovery, JD Sports Fashion shares still remain in a longer term downward trend over the past year, and are 18% lower than where they began 2024. This decline was largely attributed to a series of challenges within the retail sector, including a competitive onslaught from international giants such as Nike and Adidas, combined with the impacts of the cost-of-living crisis that has negatively influenced the fashion sportswear market.

Régis Schultz, the CEO of JD Sports Fashion, has made ambitious moves to manoeuvre through these trying times. By championing an aggressive expansion strategy, Schultz hopes to enhance the company's market share and boost its profit margins. A significant aspect of this plan is the proposed acquisition of American athletic retailer Hibbett for a hefty sum of $1.08 billion, in addition to launching new stores to bolster revenue.

Despite a dip in sales reflected in the Q1 results, Schultz remains assured in his ability to meet the full-year profit guidance. This confidence is mirrored in the company’s expansionary activities but comes with a note of caution for investors. The company's aggressive growth strategy carries high stakes and could bring considerable impact on those holding shares in the company.

JD Sports appears to be a stock in transition, embodying both the potential for growth and the risks intrinsic to aggressive expansion. Whether JD shares break out and hold above some of these psychologically, and technically important levels only time will tell. Ideally, traders would wait for confirmation of a trend on a retest level before taking a position.