JD revenues top £1bn, but investment hits profits
REVENUE at retailer JD Sports Fashion passed through the £1bn barrier for the first time, but investment in expanding the business has dented profits.
The Bury-based group, which operates a number of stores, from JD Sports to Bank and most recently Blacks Leisure, also owns sports brands such as Canterbury and Kooga.
As trading conditions on the UK have worsened, JD has spread its wings into France, Spain and Ireland, and also added brands like Canterbury – which has just sealed a major sponsorship deal with the England Rugby team.
In the 52 weeks to January 28 JD saw revenues grow 19.9% from £883.6m to £1.05bn, while pre-tax profits before exceptionals came in 6.9% lower at £75.9m. Including exceptionals of £9.6m (£3.5m related to restructuring at Blacks and £3m related to warehouse reorganisation) bottom line profits were down 14% at £67.4m.
Finance director Brian Small told TheBusinessDesk.com, the results reflect the heavy investment in expanding in Europe over the last year, and also the fit-out of a new warehouse at Kingsway Business Park in Rochdale.
He said margins in a tough consumer environment had held up well, but shoppers were increasingly becoming value-driven.
The £1bn turnover milestone, he said was “great news for Manchester and the North West,” adding: “It’s great for our employees too, we have come a long way over the lasy six or seven years, and you can’t do that on your own – you have to have a great team around you.”
He said Blacks – bought for £20m in January out of administration – would not be back in profit until financial year 2014, and “needs a lot of attention.”
Aside from Blacks, he said JD’s strategic plan was to expand in Europe this year with “double digit” store openings for the JD Sports brand in France and Spain combined.
Despite the dip in profits JD raised its final dividend by 10% to 21.2p, taking the total for the year to 25.30p, up from 23p per last year.
Commenting on the future outlook for the group, executive chairman Peter Cowgill said: “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 fascias with net like-for-like sales for the 9 weeks to 31 March 2012 of +1.2%.
“Margins remain under pressure as consumers continue to be offer driven. The group is exceptionally well positioned with its retail proposition, financial resources and management experience to take advantage of any opportunities both in the UK and internationally.
“Whilst the board recognises that current expansion activity is likely to impact returns in the short term, it remains confident that the group is being positioned to deliver longer term earnings growth and increasing shareholder returns.”
