Seven up for JD but challenges loom says Cowgill

JD SPORTS Fashion continued its golden run with a seventh year of sales and earnings growth, as profits surged 21% to £81.5m.

The Bury company, consistently one of the better performers on the high street, said sales in the year to January 29 rose 15% to £883.6m. In line with its strong performance JD hiked its final dividend 31% to 19.2p.

Executive chairman Peter Cowgill told TheBusinessDesk.com he was pleased with the results but warned of a number of “headwinds” facing the business in this financial year.

“We are in good shape to meet a number of inevitable challenges. The first is that the Government is taking an increasing slice of the cake in terms of VAT, and that’s going to affect all retailers in terms of the bottom line.

“Costs are going, up, we do a lot of our product sourcing in the Far East and the price of cotton has surged and there is also labour cost pressure there too. Finally there is recessionary pressures here, with disposable incomes being hit.”

He said the board is “extremely cautious in its outlook” for this year, but was alive to opportunities to grow the business. 

Having acquired a business in Ireland, Champion, in recent months, and also bought several new brands – Sonneti, Chilli Pepper,Nanny State and most recently Fenchurch  – Mr Cowgill said the group was also pleased with its tentative overseas expansion.

“We have opened three JD stores in France, one is a conversion of a Chausport store (the french footwear business JD has owned since 2009) and the other two are in Lyon and just outside Paris, and we are pleased with the early results and we’ll be opening more.”

He confirmed too that he was looking at “other European opportunities” such as Spain.

JD said its net cash position at the period end had increased to £86.1m from £60.5m in 2010.

The group has more thasn 530 stores in the UK, Ireland and France operating with as sports fashion or fashion shops. Brands include JD, Size? Bank and Scotts.

The company’s new leased warehouse building in Rochdale, which when completed will comprise of 866,250sq ft has been built and is now in the fit out phase.

Total anticipated fit out costs are approximately £20m of which £3.9m was incurred in the year to February. The move to full operational use will be phased through the early months of 2012.

Looking ahead the company said trading in the current financial year is “difficult to gauge” because of the late Easter holiday period.

For the 8 weeks to 26 March 2011 gross like-for-like sales (including e-commerce) were +0.4% whilst net sales have declined 1.2%