Business news :JD Sports Earnings Hurt by Blacks Losses

JD Sports reported earnings tumbled in the first half, hurt by £10 million ($16.2mm) in losses from Blacks, which it took out of administration in January.

First-half pre-tax profits came in at just £2.9 million ($4.7mm) from £20.1 million in the first half of last year. Revenues rose 26 percent to £556 million ($898.2mm). Like-for-like sales in its core retail business ticked up 1.1 percent in the first half.

The company blamed Blacks' loss on "critical lack of stock and unsustainable cost base following acquisition from administration with vast majority of the loss incurred in the first three months." The company described Blacks' business as "stabilising with stores fully restocked and central cost reorganisation programme ongoing."

It added that the further reduction in operating profit was largely due to the phasing of earnings streams from new acquisitions and acquisitions made in the prior year together with duplicate and excess warehouse operating costs incurred in the transition to the centralised Kingsway warehouse which is now fully operational

Recent trading has been mixed with like-for-like sales in the sports shops up 3.2 percent in the six weeks to September, while like-for-like sales at JD's fashion stores dropped 6 percent.

Peter Cowgill, Executive Chairman, 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 Fascias has been more difficult. Our Outdoor business continues to stabilise and aims to break even in the second half before any restructuring charges.

"As ever, the Group result for the full year remains very dependent on the sales and margin performance in December and January. 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."

The company said full-year profit before tax should come within expectations of £65-£70 million.

( SportsOneSource Media )