JD's growth quickens but Black's will take a year to fix

published 13 June 2012

Sports fashion retailer JD Sports Fashion has seen an improvement in like-for-like sales growth but, as anticipated, gross margins remain under pressure.

LFL sales in the 19 weeks to June 9th were up 1.5% on the corresponding period of the previous year, which represents an improvement in the growth rate of 1.2% previously reported for the nine weeks to the end of March.

In the 19 week period, LFL sales at what the firm calls its Sports Fascias were up 1.2%, an improvement on the previously reported 1.0% growth in the nine weeks to the end of March, while LFL sales growth at its Fashion Fascias improved from the previously reported 2.3% to 3.0%.

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The group said it is getting to grips with Black's Leisure, the loss making retailer it acquired earlier this year. At the time of the acquisition the chain was suffering from a lack of stock, too many shops lumbered with high rents and a disproportionate cost base at head office, and these problems are unlikely to be completely addressed until next year, the group said.

The anticipated level of the operating loss in the Black's Leisure business in the current year is £10m with the potential for a further up to £5m charge for restructuring. The bulk of the operating loss in Blacks will occur in the first half of the financial year, which runs to the end of January.

Management confessed that it is difficult to offer an accurate assessment of the short term prospects for the Black's Leisure business, but the board continues to believe that Black's market position can be exploited profitably in the medium term.