JD Sports Fashion, the British sports and fashion retailer that took over the bankrupt Blacks Leisure Group at the beginning of last year, gave some indications of its performance in the financial year ended last Feb. 2. According to preliminary figures, the total revenues of the U.K.-based fashion and sports retail group increased by 18.8 percent to £1,258.9 million (€1,493.0m-$1,951.5m), but the gross margin declined to 48.7 percent from 49.2 percent in the previous year.
Operating profits before exceptional items declined by 19.8 percent to £61.3 million (€72.7m-$95.0m). The pre-tax profit fell by 18.3 percent to £55.1 million (€65.3m-$85.4m), but the management stressed that the reorganization measures recently implemented in the U.K. and the investments being made in the rest of Europe will be beneficial in the long term.
The group's outdoor stores, which consist essentially of the Blacks and Millets chains, contributed an operating loss of £14.9 million (€17.7m-$23.1m) before extraordinary items on sales of £121 million (€143.5m-$187.5m). These results are not comparable with those of the previous financial year, when these operations were only briefly under JD's control. The gross margin improved to 47.3 percent, however.
Overall, the group's sports stores generated an operating profit before exceptional items of £77.8 million (€92.3m-$120.6m), up from £74.3 million in the previous year, as their sales grew to £854.0 million (€1,012.6m-$1,323.6m) from £774.6 million. Their gross margin was off slightly to 50.6 percent from 50.8 percent, but comfortably higher than the margins achieved in the fashion retail, outdoor retail and distribution segments.
The sporting goods stores in the U.K. and Ireland generated 1.2 percent higher revenues on a comparable store basis, and the rate of growth reached 2.5 percent excluding the Irish Champion Sport chain. Taking away any extraordinary items, the group's sports stores in the UK and Ireland contributed an additional £4.7 million (€5.6m-$7.3m) to operating profits, as compared to the previous year.
The good performance continued in these stores in the nine weeks ended last April 6 with a sales increase on a same-store basis of 1.9 percent during the period, excluding Champion. The outdoor stores benefitted from the recent sustained cold weather and from a stock clearance program from January through March.
Peter Cowgill, executive chairman of the group, admitted that the recent intense takeover activity has impacted its results in the short term, but said it is well positioned to deliver higher profits over the longer term. He also declared that it is exceptionally well positioned to take advantage of further opportunities in the U.K. and elsewhere (more in SGI Europe).