JD Sports hit after venturing into great outdoors

JD Sports saw profits plunge in the first half as it worked to integrate outdoor activity chain Blacks, which it bought out of administration in January.

The firm said Blacks had made an initial loss of £10m, as expected, due to a critical lack of stock and unsustainable cost base.

It added the vast majority of the loss incurred in the first three months and Blacks' stores were now fully restocked and a central cost reorganisation programme was ongoing.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The company was also hit by disappointing trading in its fashion-wear division, something which got worse moving into the second half of the year.

The first half saw gross like-for-like sales in its core UK and Ireland retail divisions of +1.1%, including a +1.2% rise in Sports and a +0.7% rise in Fashion.

Going into the second half of the year JD Sports said like-for-like sales for its core UK and Ireland retail divisions in the six week period to 8 September were up by 1.6%.

This was driven by Sports, which were up 3.2%, offsetting a 6.0% fall in Fashion.

In the first half the firm posted revenues of £556m, up 26.4% on the year before.

However, including the impact of Blacks, profits plunged to £2.88m from £20.07m the previous year.

Chief Executive Peter Cowgill said that, as ever, the group result for the full year remained very dependent on the sales and margin performance in December and January.

"Notwithstanding the economic pressure on margin and the general increase in taxation and other levies across Europe, the board believes that the group is well positioned to deliver results that are within the range of current expectations," he said.