JD Sports "extremely cautious" on outlook despite profits surge

Group profit before tax and exceptional items jumped 21% to £81.6m.

Revenue climbed 15% to £883.7m while like-for-likes increased 3.1%.

Gross margin improved to 49.5%.

Current trading has softened, with like-for-likes increasing 0.4% in the 8 weeks to March 26, although JD said it was hard to make a comparison as Easter fell earlier last year.

In the 8 week period net sales declined 1.2%, which it said is a direct result of the Government’s fiscal changes, which include raising VAT.

JD Sports chairman Peter Cowgill said gross revenue will be hit by £16m for the year to January 28 2012 compared with the year ending 2011, as a result of the VAT rise.

He said: “The retail environment has recently been significantly impacted by adverse fiscal changes in addition to the multiple current economic pressures.

“Against that background, therefore, it is inevitable that the board is extremely cautious in its outlook, particularly when the profits achieved for the year are effectively rebased purely as a result of the impact of increased VAT.”

Cowgill said the reporting year has been the seventh successive year of “good progress in revenue and profitability for the Group”.

He said: “Such sustained performance continues to reflect the strength and uniqueness of our brand as well as the strength of our management teams.”

 “Management remain highly focused on all avenues of revenue growth, margin protection and cost control…..and with a strong balance sheet and dominant market position in our core business, we expect to be able to deliver operational and financial progress for the Group over the long term.”

JD continued to snap up brands in the year, acquiring Sonneti, Chilli Pepper, and Nanny State for a total of £2.1m. Since year end it bought Fenchurch out of administration for £1.1m and acquired Republic of Ireland’s Champion Sports.

JD said the “strength of the JD offering gives potential for further replication internationally, albeit in Europe initially”.

It sees it as a “key opportunity” for the business, and is looking at potential acquisitions and joint ventures in other territories “on a regular basis”

At the retailer’s Sports Fascias’ total revenue increased 8% £667.2 m in the year, with like-for-likes up 3.8%.

At its Fashion arm, total revenue in the year was £102.4m, compared with £82.8m.

JD said it continues to rationalise its store portfolio wherever possible but added: “With the current economic climate impacting heavily on retail property occupancy levels, it remains very difficult to dispose of underperforming and/or duplicate stores.”