• Full-year pre tax profit fell 18.3% to GBP55.1m 
  • Revenue jumped 18.8% to GBP1.26bn
  • Like-for-like sales rose by 1.2%

UK sportswear retailer JD Sports Fashion has seen its full-year pre-tax profit plummet, after losses at the Blacks Leisure outdoor clothing and equipment chain offset higher revenue.

The company today (17 April) said profit before tax fell 18.3% to GBP55.1m (US$84m) for the 53 weeks to 2 February, compared to GBP67.4m last year.

The outdoor business, which include Blacks and Millets, saw operating losses of GBP14.9m - although JD Sports said it expects performance to improve in the new financial year.

The retailer's revenue, however, jumped 18.8% to GBP1.26bn from GBP1.06bn the prior year, while like-for-like sales rose by 1.2%. Gross margin fell from 49.2% to 48.7%.

During the year, the company closed 122 stores and opened one, taking its total number of stores to 174 against 295 last year. A further five stores have closed since the year end.

The retailer said its initial strategy for Blacks, which it acquired for GBP20m in January 2012, was to retain only the namesake fascia long term with approximately 130 stores.

However, it now sees a place for the Millets brand, which was owned by Blacks. As a result, JD Sports will retain around 140 stores in the longer term, of which 80 will be Blacks and 60 will be Millets.

The group said the two fascia strategy will help product segmentation, with Blacks stores stocking more technical products from premium brands at higher price points, while Millets will target the more casual outdoor customer.

"The core sports fascias in the UK continue to produce excellent results and provide the group with a very solid foundation for ongoing profitability and cash generation," said executive chairman Peter Cowgill. 

During the nine weeks to 6 April, like-for-like sales in the UK and Ireland were up 0.5%, with a 1.9% increase at the sport fascias helping offset a 6.2% decline at the fashion stores.

"We are pleased overall with the start that we have made to the new year. A very considerable amount of reorganisation in both outdoor retail and our warehousing and distribution operations is now behind us and this should benefit trading in the balance of the year," Cowgill added. 
"The group is exceptionally well positioned with its retail proposition, financial resources and extended management experience to take advantage of opportunities both in the UK and internationally.

"Whilst the board recognises that recent acquisition activity has impacted on short term returns, it remains confident that the group is well positioned to deliver earnings growth and increased shareholder returns over the longer term."

Conlumino consultant Anusha Couttigane described the results as "a mixed achievement."

Commenting on the results she said: "Despite posting an 18.8% growth in revenues, JD Sports' subdued like-for-likes of +1.2% indicate this is a mixed achievement for the group.

"Having acquired several failing businesses over the year, robust performance in its traditional sports division has been muted by the 'disappointing' results in its fashion and outdoor fascias."

She added that the group's fashion fascia has "suffered significantly" this year adding that it "needs to streamline its strategy and articulate a lucid identity across all its fashion brands in order to turn this division around".