JJB Sports warned investors last week that its pre-tax profits for the financial year ending Jan. 29 will fall below market expectations, ranging between £32 million (€47m-$53m) and £36 million (€57m-$64m), after a “disappointing performance” in the 22 weeks ended Jan. 1, where its gross margin declined by 320 basis points from the year-earlier level. Sales of footwear fell by 2.6 percent over the period, while other product categories featured sales increases.
Total revenues for the period were up by 2.3 percent, sustained by discounting, but they were down by 0.4 percent on a same-store basis. JJB says it has been running a “vigorous” promotional campaign since October, in view of a very competitive market for sports clothing and footwear, resulting in more satisfactory revenues than during the 1st half of the year. During the last six weeks of the period, between Dec. 19 and Jan. 1, JJB slashed prices further in connection with its Christmas sales, leading to sales increases of 4.0 percent in absolute terms and 2.0 percent on a same-store basis.
On the other hand, revenues from JJB’s growing chain of health clubs rose by 54 percent during the latest 22-week period. The number of clubs in operation was up to 54 from 21 a year ago, and their total membership rose to 121,100 from 83,400. JJB’s management is confident that the group will achieve a better performance next year as the number of clubs and members increases. JJB plans to open 18 new superstores during the next financial year, with 12 of them comprising a health club. The World Football Cup will be another boosting factor.
