JD confirms Blacks hit as profits slide

JD Sports has reported a sharp fall in half year profits as it confirmed its warning that progress would be hampered by its pre-pack acquisition of ailing outdoor chain Blacks in January.

JD also saw a slump in the performance of its fashion stores and encountered costs associated with its new central warehouse in Rochdale as bottom-line profits tumbled from £20m to £2.8m as revenues rose 26.4% to £555.9m,

The Bury-based company said Blacks had made a £10m loss in the period, during which time stock supply issues had been addressed and 93 stores closed.

Stripping out the impact of Blacks JD said like-for-like operating profit was 8.2% below last year at £14.9m.

Blacks currently trades from 198 stores and JD expects this number to be further reduced in time to around 150.

The firm said it was also hit by disappointing trading in its fashion division, which includes Bank and Scotts, and this had continued in the second half of the year.

The first half saw gross like-for-like sales in its core UK and Ireland retail divisions of +1.1%, including a +1.2% rise in Sports and a +0.7% rise in Fashion.

Going into the second half of the year JD Sports said like-for-like sales for its core UK and Ireland retail divisions in the six week period to 8 September were up by 1.6%.

This was driven by Sports, which were up 3.2%, offsetting a 6% fall in Fashion.

Executive chairman Peter Cowgill said: “I stated in April that 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 would impact results in the short term.

“As expected, this has proven to be the case but it does provide the Group with 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. The robust trading in the Sports Fascias has continued since the period end although trading in the Fashion dascias has been more difficult. Our Outdoor business continues to stabilise and aims to break even in the second half before any restructuring charges.”

Looking ahead, JD, which also has businesses in Ireland, France and Spain, said the result for the full year remains “very dependent” on the sales and margin performance in December and January.

Mr Cowgill added: “Notwithstanding the economic pressure on margin and the general increase in taxation and other levies across Europe, the board believes that the group is well positioned to deliver results that are within the range of current expectations.”

Last month JD sold its Canterbury rugby brand to major shareholder Pentland Group for £22.7m increasing its retail focus. During the last six months it has added a number of new brands to its portfolio.

Acquisitions included Tessuti and Originals in the period along with the worldwide rights to the Henleys and Fly 53 brands, whicgh were purchased at a cost of £2.6mn and £400,000  respectively.