JD Sports profit hit by Blacks acquisition
UK sportswear retailer JD Sports has said that profit before tax for the year ended 28 January fell 14% to £67.4 million. The Blacks Leisure business dented profits by £2.2 million, the company said. Operating profit was down 4.3% to £76.5 million.
Revenue increased 19.9% over the year to £1 billion, with like-for-like net sales down 1% over the year. Gross margin fell to 49.2% from 49.5% in the previous year, which the company attributed to the impact of the acquired businesses.
The company remains cautious about its prospects for the coming year although expects “some improvement in consumer confidence from the forthcoming international sporting events,” executive chairman Peter Cowgill said.
Like-for-like sales in the nine-weeks to 31 March have risen 1.2%, although margins “remain under pressure as consumers continue to be offer driven,” added Mr Cowgill.
The company said that Blacks, which it acquired for £20 million in January this year, needs to concentrate on the traditional core strengths of its branded and own brand outdoor offer “and re-establish its market-leading authority through a much reduced store base, a strong multichannel offer and a more appropriate central cost structure”.
Since the acquisition, the company has closed 81 loss-making Blacks stores, leaving a current store base of 215. It said the size of the store base will depend on store performance when set against newly negotiated rents and associated property costs. It is also evaluating central overheads and rationalising where appropriate, the company said.
“We do not expect these savings to be wholly realised until Spring 2013 and so, whilst we expect a modest recovery in the second half, we now anticipate that Blacks will be earnings dilutive in the current year,” said Mr Cowgill.
