JD Sports reports profit fall
Sportswear retailer JD Sports Fashion has reported that revenues surged to £1 billion in the year to 28 January but said its acquisition of the collapsed Blacks Leisure chain contributed to a fall in profits.
Revenues for the full-year climbed to £1,059.5 million, up from £883.7 million in the previous year. However pre-tax profits fell 14.2% to £67.4 million as higher costs squeezed margins and exceptional charges rose to £9.7 million from £4.3 million in the prior year.
JD said the Blacks business was in a fractured state on acquisition and said it had inherited a "limited and unbalanced stock position" which it was now working to rectify.
In the three weeks from JD’s acquisition to its year end, Blacks generated revenues of £5.9 million, but delivered an operating loss (excluding exceptional items) of £2.2 million for the period. JD attributed the loss to a lack of stock, an excessively large and over-rented store portfolio, and a disproportionate central cost base.
Executive chairman Peter Cowgill said the group was still evaluating the right size for the Blacks estate, which currently comprises 215 outlets.
Regarding the outlook for JD's overall group business 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% (Sports Fascias +1.0%, Fashion Fascias +2.3%). Margins remain under pressure as consumers continue to be offer driven.returns."
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