While the festive season proved fatal for several British retailers, the JD Sports Fashion group boasted that comparable sales jumped by 3.2 percent for the seven weeks until Jan. 5 in its JD and Size stores in Britain and Ireland.
For the 49 weeks from the start of the fiscal year until Jan. 5, comparable sales in these stores were up by 2.4 percent. The mix of sports and fashion was apparently appealing for consumers: Nike, Adidas and Converse were among the strongest brands in footwear, while Duffer and the Carbrini private label performed well in apparel.
JD may also have benefited from the closure of most JJB stores, as the second-largest British sports retailer went into administration last year. The JD group added that the gross profit margin in the JD and Size stores in the U.K. and Ireland had firmed up, so that their margin for the 49 weeks almost returned to the level achieved for the comparable period the previous year.
With higher sales and similar gross profit margins as last year, the JD group predicts that the earnings of its British and Irish sports stores trading as JD and Size will be slightly above those of last year – in spite of the extra cost of integrating into its distribution center in Rochdale the warehousing functions of Blacks, the outdoor retailer acquired by JD Sports Fashion in February last year. JD remains upbeat about the prospects for its British and Irish sports retail operations, as well as its international sports stores.
On the other hand, the company said that sales had been disappointing in the Blacks and Millet outdoor stores it bought last year. JD Sports Fashion was quick to add that it had to deal with products purchased by the previous management. The key players in that team have all been replaced but the retailer warned that it would still take some time for the changes to yield results.
The JD group emphasized that it had rapidly rationalized its outdoor stores: It still has 176 Blacks and Millets stores, compared with 290 stores at the time of the takeover, and the spread of locations has been improved. The refurbishment carried out in seven Blacks stores so far had been well-received by some of the retailer's leading suppliers and it has been producing encouraging results.
JD therefore stated that the sales of its outdoor business could be expected to improve in the next fiscal year, both online and in the physical stores. The retailer added that it should reap the benefits of cost reductions in its outdoor retail unit, so that losses should be reduced as the year progresses. JD previously stated that it expected its outdoor business to suffer an operating loss of £10 million (€11.9m-$15.9m) for the current fiscal year.
Meanwhile, comparable sales for the group's fashion stores, under the Bank and Scott banners, contracted by 7.9 percent for the seven weeks in the festive season, and they were down by 3.9 percent for the 49 weeks since the start of the fiscal year. The gross profit margin for the period until Jan. 5 in these fashion stores reached about the same level as in the same period the previous year, and Bank is now expected to only break even for the full fiscal year.
Due to the losses incurred by the outdoor stores in the current fiscal year, the JD group said that its profit before tax and exceptional items should land at about £60 million (€71.4m-$95.4m), which is at the lower end of market expectations.
