UK: JD Sports fashion division a cause for concern
The fashion arm of UK retailer JD Sports continues to be a cause for concern, an analyst has said, after the division revealed widening trading losses in its full-year.
Greg Bromley, a consultant at Conlumino, said the group had revealed an "impressive" set of annual results, with its strongest performances at its core sports fascias: JD and Size.
Indeed, group pre-tax profits climbed 5% to GBP57.8m (US$96.7m) in the 12 months ended 2 February, while sales were up 5.7% to GBP1.33bn.
However, the group's fashion arm continues to be "a cause for concern", Bromley said, after JD Sports cited a "difficult year" for the division, with operating losses increasing to GBP6.4m from GBP1.7m last year.
This sector of the business contains six brands: Bank, Scotts, Tessuti, Cloggs, Ark and Nicholas Deakins. But it is Bank that has been cited primarily as producing the poorest performance.
The brand was given a new managing director in July last year and since then, Bromley notes, there has been a greater focus on leveraging multichannel to turn around the ailing branded fashion store.
He adds: "Premium fashion also continues to underperform, with its Tessuti and Original stores suffering due to legacy property issues. Despite these struggles, this didn't stop the group acquiring Cloggs and Ark from administration last year.
"Although it is too early to judge the performance of these brands yet, it is clear that JD will have to do more to ensure its clothing offer has a real identity, and is competitive on price. A sensible strategy could therefore come from streamlining its branded fashion offer into a single or a few fascias, instead of the numerous similar options currently on offer."
Despite the continued issues faced at JD's outdoor and clothing arm, Bromley is confident the group is well-positioned for further growth.
"The major challenge for the group will be to manage an ever expanding empire that contains three different arms (sports, clothing and outdoors) and an ever widening portfolio of fascias. We believe that JD may decide to consolidate its brand presence in the coming years, which will ultimately give it a more manageable, streamlined portfolio."
UK retailer JD Sports says it expects full-year profit to be at the top end of its guidance after booking a strong sales performance over the Christmas trading period....
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