For a moment, it looked like Diageo (LSE: DGE) shares might finally be on the mend. The same applied to another struggling consumer stock in my SIPP, JD Sports Fashion (LSE: JD). But once again, both are in full retreat. Diageo is down almost 10% in the last month, while JD Sports has slumped 15%. Will these two former FTSE 100 darlings ever recover?

Both have had a torrid few years. Diageo issued its first profit warning in November 2023 after a sharp sales slowdown in Latin America and the Caribbean, combined with inventory failures. JD Sports followed in January 2024, as cautious consumers, mild weather and heavy discounting hit profits.

Why have these FTSE 100 shares struggled for so long?

Both companies still make plenty of money, but growth has become disappointingly slow.

Diageo’s latest full-year results showed reported sales falling 3% to $19.6bn, while reported operating profit plunged 27% to $3.16bn. Although one-off impairment and restructuring costs didn’t help. Full-year sales at JD Sports rose 10.5% to £12.7bn, but adjusted profit before tax fell 7.7% to £852m. They’re still making money, but profits are dwindling.

Both look decent value today. Diageo has a price-to-earnings ratio of about 13.3, roughly half its old glory-days valuation. JD Sports is even cheaper at around 9.4, although it’s been as low as six and that didn’t help the shares kick on. The value just didn’t turn out to be there.

Loyal investors have taken a hammering. The Diageo share price is down 53% over five years, while JD Sports has fallen 61%. Investors aren’t getting much income as consolation. They yield roughly 2.29% and 1.48%, respectively.

Can they recover from here?

The threat of higher inflation and interest rates is behind the recent retreat, in my view. Consumers are struggling, notably in the US. We think Britain is having a hard time while the US economy booms, but many ordinary Americans are struggling to find the money for life’s treats, whether that’s a bottle of tequila or a new pair of trainers.

Both companies have also been hit by tariffs, and now there’s another blow for Diageo. The US is banning imports of certain Canadian alcoholic drinks from September 29, potentially affecting Canadian whisky exports and adding another complication for the drinks giant.

I asked in my headline what on earth has gone wrong with these two. Answer: almost everything.

They’re still good companies and I think they’ll recover at some point, but it’s going to take much longer than I ever thought. If inflation keeps rising and interest rates follow, consumers will feel the squeeze even more. I’m holding on to these two out of habit. One day they may turn, and when they do, they could move quickly.

But for new purchases, I’m considering opportunities elsewhere on the FTSE 100. I can see much brighter growth stocks out there today…

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Harvey Jones owns shares in Diageo and JD Sports.