UK retailer JD Sports Fashion has booked what executive chairman Peter Cowgill described as “excellent progress” in its last financial year, posting a double-digit hike in both earnings and revenue for the period.
The retailer of sports, fashion and outdoor brands today (16 April) said pre-tax profits for the 52 weeks to 2 February rose 15.4% to GBP339.9m (US$444.7m) from GBP294.5m last year.
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Headline profit before tax and exceptional items increased by 15.5% to GBP355.2m. The latest numbers means that after delivering a headline profit of GBP100m for the first time in the year to January 2015, the headline profit has now increased by more than GBP250m over the subsequent four years – a compound rise in excess of 37% per annum.
Revenue, meanwhile, surged 49.2% to GBP4.72bn from GBP3.16bn a year earlier. This includes GBP1.24bn from businesses that were not like-for-like for the year, principally Finish Line (GBP956.6m) for the 33 weeks post-acquisition and Sport Zone (GBP183.9m), which was a member of the group for the full year following completion of the acquisition on 31 January 2018.
Like-for-like store sales for the 52 week period across all group fascias, including those in Europe and Asia Pacific, increased by 1% with the overall like-for-like growth including online increasing by more than 5%.
Total gross margin of 47.5% was slightly behind the prior year at 48.4% as a consequence of the lower margins in the acquired Finish Line and Sport Zone businesses.
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By GlobalDataWhile its core operations in the UK and Ireland continue to deliver a further increase in sales and profitability, the retailer said international development of the JD fascia continues with 39 new stores opening over the year across Europe, and a further 34 JD stores opened in the Asia Pacific region in the year. In addition, the group’s acquisition of Finish Line in the United States significantly extends its global reach with the trial of the JD fascia delivering an “encouraging early result.”
“This new record result for our group has been achieved with a relentless focus on ensuring that, at all times, we provide a compelling differentiated proposition to the consumer with an attention-grabbing theatre both in stores and online,” Cowgill said. “Consumers expect our product and brand mix to be emotionally engaging, exclusive and continually evolving with high levels of social media penetration and an increasing pace of technology adoption across our core demographic ensuring that new styles and trends spread rapidly across a wide geography.”
Looking ahead, the retailer said while it recognises there is uncertainty surrounding the nature and timing of the UK’s exit from the European Union, it is cognisant of the potential consequences of a disorderly exit on supply chains, tariffs, exchange rates and consumer demand.
“Notwithstanding this uncertainty, the board remains confident in the international potential of the JD proposition,” it added, noting given the significance of Easter trading to the overall result of the group and the change in the timing relative to last year, any announcement of like-for-like sales performance in the year to date would lack precision.
Richard Lim, chief executive at Retail Economics, said JD’s latest set of results show that standing out in a crowded market with exclusive products, a unique proposition and placing the experiences at the heart of the store is a winning formula in today’s digital age.
“Investment in the retail theatre in concert with digital integration has propelled the retailer to an enviable market position, translating into healthy financials,” he said. “Despite the challenging conditions on the high street, retailers who continue to thrive are those that have embraced change, invested in digital and listened to their customers to keep products fresh and desirable.”
James Yacoub, retail analyst at GlobalData, concurs. ”As many of its competitors have been sluggish to embrace the ever-changing retail landscape, JD Sports has accelerated its development by prioritising internationalisation, investing in its online channels and striving towards a streamlined retail model. While close competitor Sports Direct’s leader Mike Ashley has been distracted expanding his portfolio of retail businesses, JD Sports has continued to gain share extending its position as market leader in the UK footwear sector.”
JD Sports has made a number of acquistions of late, including Pretty Green, the boutique men’s clothing brand launched by Oasis frontman Liam Gallagher, and struggling rival Footasylum in a GBP90.1m (US$119.4m) deal. The Footasylum bid was given the go-ahead by the two parties’ boards last week.
