JD Sports posts 20 percent rise in first half revenues

JD Sports Fashion in its interim results for the 26 weeks ended July 30, 2016 (said that total Group revenue increased by 20 percent to 970.6 million pounds (1,292.6 million dollars). Like for like sales across all Group fascias, including those in Europe, increased by approximately 10 percent.

“I am delighted to report that this has been another period of excellent progress for the Group. Given that last year’s result was in itself a record for our Group then to increase this by a further 66 percent has exceeded reasonable expectations. Notwithstanding the demanding comparatives going forward following the strong revenue growth in the previous three years, the positive nature of trading in the second half to date is encouraging,” said Peter Cowgill, Executive Chairman of the company.

Detailed review of the first half performance

Total gross margin of 48.1 percent was 0.7 percent higher than the prior year. Operating profit before exceptional items increased by 63 percent to 77.6 million pounds (103.3 million dollars) following a positive performance in sports fashion stores and an encouraging reduction in losses in outdoor.

Sports fashion operating profits before exceptional items increased by a further 53 percent to 79.9 million pounds (106.4 million dollars). The company also posted a further increase in the like for like store sales in these fascias of approximately 10 percent.

The overall gross margin in Sports Fashion is slightly higher than the previous year reflecting the impact of the stronger euro on JD’s euro denominated businesses and continuing low markdown levels. The weakening of sterling against the US dollar after the Brexit vote, the company says, may cause some headwinds on margin in 2017.

Total operating losses in the outdoor category in the first half, reduced to 2.3 million pounds (3 million dollars).

The adjusted earnings per ordinary share before exceptional items have increased by 60 percent to 29.83p and the basic earnings per ordinary share increased by 69 percent to 29.83p. The Board proposes paying an interim dividend of 1.25p per ordinary share, an increase of 4.2 percent.

Acquisitions and retail expansion marked the first half

The company said, there has been further progression in Europe during the period with new stores in several of its existing territories complemented by two multi-store acquisitions. In March, JD Sports acquired the trade and store assets of the Aktiesport and Perry Sport retail fascias in the Netherlands from the trustee in bankruptcy of Unlimited Sports Group. Given the acquired stock position and the lead times on ordering product, the company would not expect the Perry and Aktie stores to make a positive contribution in the current year.

In July, it also acquired 12 stores in Portugal which previously traded as The Athlete’s Foot. These stores will be converted to JD in the second half. The company anticipates the opening of additional JD stores across Europe in the remainder of the year, including the opening of flagship style stores on Rue Neuve in Brussels and Hohe Strasse in Cologne. The company is also currently refurbishing the flagship Perry Sport store on Kalverstraat in Amsterdam and expanded its presence in Malaysia with the acquisition from the JD joint venture partner Stream Enterprises of 20 small multi-brand stores trading as Sports Empire, Revolution and The Marathon Shop.

Since the period end JD Sports has also acquired Next Athleisure in Australia which has 32 stores trading as Glue. This business and its management will provide the platform to open JD in Australia.

Picture:JD Sports