Fall in JD Sports’ pretax H1 profitTuesday, 18 September 2012
JD Sports Fashion Plc, the leading retailer and distributor of branded sportswear, fashion wear
and outdoor clothing and equipment, has announced its interim results for the 26 weeks ended July 28, 2012. Profit before tax decreased to 2.9 million pounds (4.71 million dollars) from 20.1 million pounds (32.6424 million dollars) last year. Earnings per ordinary share were 2.74 pence (4.45 dollars) compared to 28.51 pence (46.28 dollars) prior year. Revenue increased to 556 million pounds (902.94 million dollars) from 439.8 million pounds (713.88 million dollars) prior year.
Like-for-like sales for the 26-week period in the core UK and Ireland Retail Fascias increased by 1.1 percent. The performance has been aided by continuing strong growth in the group’s online sales. Revenue increased by 1.2 percent on a like-for-like basis in the Sports Fascias and by 0.7 percent in the Fashion Fascias.
The main adjustments between operating profit and like-for-like operating profit are the results of Blacks, which was a £10 million (16.23 million dollars) loss, and other business acquisitions, which were a £1.7 million (2.76 million dollars) loss. There was continued robust performance in core Sports fascias with gross margin ahead of expectations. The principal reasons for the initial loss of £10 million (16.23 million dollars) in the Blacks business are a critical lack of stock and unsustainable cost base. Much of the loss was incurred in the first three months. There was a further reduction in operating profit but this was mainly because of the phasing of earnings streams from new acquisitions and acquisitions made in the prior year together with duplicate and excess warehouse operating costs incurred in the transition to the centralised Kingsway warehouse.
JD Sports Fashion continues to develop in Europe. Seven stores opened in France and three stores opened in the period in Spain. Peter Cowgill, Executive Chairman, had said in April that results in the short term would be hit by the recent expansion activity in the group, the relocation of distribution facilities and the resolution of the stock and property issues in the Blacks business. And this did happen but the group believes this is a very positive platform for future development.
“I am pleased to report that our primary JD fascia remains robust and we have increased our overseas presence with the intention of producing long term value for shareholders,” said Peter Cowgill. “The robust trading in the Sports Fascias has continued since the period end although trading in the Fashion Fascias has been more difficult. Our Outdoor business continues to stabilise and aims to break even in the second half before any restructuring charges.”
However results for the full year depend on the sales and margin performance in December and January. In spite of the economic pressure on margins, and the general increase in taxation and other levies across Europe, the group is confident of delivering results that are in line with expectations.