JD Sports Fashion's operating income before extraordinary items rose by 27.5 percent to £78.2 million (€95.25m-$131.46m) in the financial year ended last Feb. 1, but while the positive contribution from its Sport segment increased by 20 percent to £93.4 million (€113.76m-$157.02m), its Fashion segment suffered an operating loss of £6.4 million (€7.80m-$10.80m), higher than the £1.7 million loss of the previous year. The big British retailer achieved a turnaround in its Outdoor segment, delivering breakeven results in the second half of the year after a loss of £4.9 million (€6.00m-$8.24m) in the first half.
JD Sports Fashion Consolidated Income Statement
'000 £, Year ended February 3, 2014
Cost of Sales
Selling & Distribution
Other Operating Income
*Operating Profit before Exceptional Items
The company, which is controlled by Pentland Group, has revised the structure of its income statement, eliminating its former Distribution segment and including its remaining components in the segments of its retail business with which they are most closely associated. JD transferred ownership of the Canterbury brand to Pentland last September.
Brands and wholesale operations such as Topgrade, Kooga, Kukri, Focus and Source Lab are now part of the Sport segment along with the JD and Size? chains based in the U.K., the recently acquired Activinstinct website, Champion Sports in Ireland, Chausport in France and Sprinter in Spain.
The Sport segment's revenues grew to £1,055.3 million (€1,285.6m-$1,774.3m) in the past year, up from £975.5 million (€1,188.4m-$1,640.0m) the year before. The gross margin remained steady at 49.1 percent of sales. The management attributed the 20 percent improvement in operating results to a strong performance in the U.K. and Ireland. Financial analysts were told last week that its JD stores have been particularly successful with their women's program.
The management declared itself “satisfied” with the group's performance in France and mentioned “an encouraging year again” in Spain, considering the economic situation of the country. Aside from Chausport and a single Size? store in Paris, the group had 17 JD stores operating in France at the end of the financial year, seven more than on Feb. 2, 2013, and the company says it plans to continue to develop the network. It is more cautious about the development of the banner in Spain, where it has been working hard with the local management to adapt the offer to the market.
As previously reported, in the past year JD acquired a number of stores in the Netherlands from a local menswear retailer and a chain of ten stores in Germany, mostly located in the Berlin area. They will all be converted to the JD banner and format later this year, but they have already been integrated into the company's IT systems. JD says it continues to look for further acquisition opportunities in foreign markets where it can grow with the support of its key banners.
At the end of the year, the group had a total of 563 sports stores in operation, up from 516 one year earlier, and they measured 1,274,000 square feet in total. With 16 store closures offsetting 15 new openings, the number of JD stores in the U.K. and Ireland remained virtually flat at 348 units. Besides the 17 stores in France, JD had 8 stores in Spain, 15 in the Netherlands and 10 in Germany. Chausport had 75 stores and Sprinter 65, up from 53 at the beginning of the year.
The group has been rather acquisitive lately in the Outdoor segment, although the number of stores remained more or less constant at 173 units at the end of the year. While reorganizing its Black and Millets stores, which are positioned in different segments of the outdoor market, it took over a loss-making Scottish outdoor chain, Tiso, that is positioned in an even higher segment, and it has bought other smaller outdoor specialty retailers in the U.K. more recently. We shall discuss JD's Outdoor segment in the next issue of The Outdoor Industry Compass.
At group level, the gross margin fell last year to 48.5 percent from 48.7 percent the year before because of the clearance of excess inventories at Blacks and Millets. The reorganization of the outdoor business was partly responsible for a major increase in extraordinary charges that led the company to post a virtually flat net profit of £41.5 million (€50.60m-$59.80m) for the year.