JD Sports Fashion Reports Sports Stores Drove Growth in Fiscal 2014

UK-based JD Sports Fashion PLC reported sales of £1.33 billion ($2.1 bn) for the year ended Feb. 1, up 5.7 percent from the prior fiscal years with a strong performance at its Sports segment and a turnaround at its Outdoor business offsetting mounting losses at its Fashion stores.

Like for like sales for the 52 week period in the UK and Ireland combined core retail fascias increased by 6.7 percent.

JD Sports, reported gross margins slipper 20 basis points to 45.5 percent. Operating profit rose 5.5 percent to £59.1 million ($93 mm) and profit before tax increased 5.0 percent to £56.9 million ($89.2 mm). As of Feb. 1, the Sports division operated 563 stores, including 348 in the United Kingdom and Republic of Ireland and the rest across Western Europe.

Sporting goods doors drive growth

The company’s Sport fascias saw strong sales performance and flat gross margins, leading to an increase in operating profit (before exceptional items) of 20 percent to £93.4 million ($146 mm).

"I am delighted to report that our core Sports fascias (JD and Size?) delivered another year of substantial progress. It is particularly pleasing that they have produced a record result in our core markets in the UK and Ireland,” wrote Executive Chairman Peter Cowgill in his annual letter to shareholders. “These businesses continue to provide the foundation for profit and expansion in the Group. We have also seen very positive developments for our Sport fascias in Europe.

  

Outdoor segment rebounds in second half

Cowgill also called out a turnaround at the company’s Outdoor division, which consists of the 76 Blacks and 80 Millets doors it acquired out of bankruptcy in 2012 and Tiso, a money losing Scottish chain of 17 stores acquired last year. The division managed to break even (before exceptional items) in the second half compared to a loss of £4.9 million ($8 mm) in the second half of the previous year.

“We made substantial operational changes during the year in our Blacks and Millets Outdoor business with the staged closure of the legacy offices and warehouse in Northampton and the relocation to the Group's main facilities,” said Cowgill.

  

Cowgill said while a major restructuring of the business was disruptive, the resulting integration into Group functions, easier access to senior management and removal of unsustainable property costs connected with the Division's Northampton site gave Blacks and Millets business a significantly better platform on which to develop.

  

"Inevitably, improvements in financial performance lag operational changes but I am encouraged that the Blacks and Millets business achieved a significant improvement in the second half of the year and we expect continued progress in the new financial year," said Cowgill. "The property portfolio for Outdoor continues to be developed. The recent acquisition of Tiso in Scotland (which also includes George Fisher in Keswick) has improved geographical coverage and increased our market share and brand access although it will not, as a business unit, enhance short term earnings. We believe over time these actions will again bring greater support to the Group from key suppliers."

 

JD Sports Fashion division reported operating losses (before exceptional items) increased to £6.4 million ($10 mm). A new Managing Director was appointed in Bank to drive the turnaround at the business, which sells through 149 stores.

 

Further development of JD's international offering from additional stores in France and Spain and acquisitions of stores in the Netherlands and Germany.

"The Group continues to be well positioned with its retail proposition, increased financial resources and extensive management experience to take advantage of opportunities both in the UK and internationally."

JD Sports Fashion PLC results by operating segments

52 weeks ended Feb. 1, 2014

 

Income statement
	Sport £000		Fashion £000			Outdoor £000		Total £000
Gross revenue	1,056,423		172,297			104,027		1,332,747
Intersegment revenue	(1,077)		(1,092)			-		(2,169)
Revenue	1,055,346		171,205			104,027		1,330,578
Operating profit / (loss) before exceptional items	93,421		(6,425)			(8,795)		78,201
Exceptional items	(4,013)		(13,323)			(1,813)		(19,149)
Operating profit / (loss)	89,408		(19,748)			(10,608)		59,052
Financial income								582
Financial expenses								(1,784)
Profit before tax								57,850
Income tax expense								(16,364)
Profit for the period								41,486

By press release

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