Thursday, February 21, 2019

JD Sports profits down due to Blacks acquisition


Sports & fashion retailer JD Sports has today reported a 19.9 per cent rise in total revenues for its latest full-year period.

Its however profits before tax fell 14.2 per cent year-on-year to £67.4 million in the 52 weeks ending January 28th 2012, largely due to the £20 million take over of beleaguered outdoor clothing & equipment specialist Blacks Leisure.

The group also acquired eight Cecil Gee stores from Moss Bros Group, Irish retailer Champion Sports and 50.1 per cent of Spanish trader Sprinter during the year for a combined investment of around £25.5 million as it looked to expand internationally and broaden its operations.

Peter Cowgill, Executive Chairman of JD Sports, commented: “During the period, we have invested significantly in brands, businesses and infrastructure to strengthen the platform for future development of the group.

“Despite the continued difficult trading conditions across our markets, we are pleased to report some positive results within the group, particularly from our mainland European businesses.”

Trading in its core UK stores remained healthy over the 12 month period despite constrained consumer spending and high unemployment among its core customer base of young adults.

Gross like-for-like (LFL) sales up 0.6 per cent, although weakness in its sports division offset small gains in fashion to result in a one per cent drop in trading once VAT had been deducted.

In the nine weeks to March 31st business has improved, and total LFLs in its domestic market have grown 1.2 per cent year-on-year.

Cowgill added: “Whilst we expect some improvement in consumer confidence from the forthcoming international sporting events, we remain cautious. Trading in the early part of the current financial year has been satisfactory in the core UK and Ireland.

“Margins remain under pressure as consumers continue to be offer driven.”

Total gross margin for the retailer fell over the full year from 49.5 per cent to 49.2 per cent, although once the impact of its acquired businesses are stripped out margins actually grew by 0.2 per cent.

One of its main rivals on the UK high street JJB Sports has recently announced that it has secured new investment as it tries to revive its stalling business, but Matt Piner, Lead Consultant at retail analyst group Conlumino, argues that these results from JD show just how difficult that will be.

“Although money is tight and confidence is low, young people are still prepared to spend money on looking good, even if that means cutting back elsewhere,” Piner said.

“JD Sports has made sure it capitalises on this attitude by upping its promotional activity and making its shoppers feel like they are getting a bargain.

“Both JD Sports and Sports Direct continue to strengthen their positions in this sector, with Sports Direct dominating the sports and equipment side, but JD more authoritative in fashion. This is leaving less and less breathing space for JJB Sports, which will need to use its recent investment to really up its game if it is to return from the brink.”