JD Sports Fashion Plc said preliminary revenue for the 52 weeks ended Jan. 31, 2009 was up 13.3% to £670.9 million ($978.8 million) from £592.2 million ($864.0 million) last year.
Total revenue increased by 3.9% on a like for like basis (Sports Fascias 3.3%; Fashion Fascias 7.9%). Gross margin improved marginally from 49.2% to 49.3%.
Profit before tax and exceptional items improved by 24% in the year to £53.6 million ($78.2 million), compared to £43.4 million ($63.3 million) in 2008. This follows increases of 73% and 51% in the previous two years.
Group profit before tax increased by 9% in the year to £38.2 million ($55.7 million) from £35.0 million ($51.1 million) the previous year. Group profit after tax increased by 4% to £24.5 million ($35.7 million) from last years £23.6 million ($34.4 million).
Group operating profit (before exceptional items) for the year was up 24% to
£54.5 million ($79.5 million) from £44.0 million ($64.2 million) last year, and comprises a Sports Fascias profit of £54.3 million ($79.2 million) (compared to a profit of £45.6 million ($66.5 million) in 2008) and a Fashion Fascias profit of £0.2 million ($0.3 million) (compared to a loss of £1.6 million ($3.7 million) in 2008.)
The year-end cash position has risen to £23.5 million ($34.3 million), compared to 2008s £11.7 million ($17.1 million), and the group retains £70 million ($102.1 million) of committed rolling credit and working capital facilities. The new year has commenced satisfactorily and the Board wishes to retain the funding capability to develop the group operationally and by acquisition. Nevertheless, after a sustained period of results improvement and balance sheet strengthening, the Board has decided to propose an increase in the level of the dividend with a final proposed dividend of 8.9p bringing the total dividends payable for the year to 12.0p (2008: 8.5p), an increase of 41%.
ACQUISITIONS
On Apr. 11, 2008 the group acquired 100% of the issued share capital of Nicholas Deakins Limited (''Deakins'') for a cash consideration of £1.4 million ($2.0 million) including fees. Deakins is a small business in the design, sourcing and wholesale of Deakins branded and own brand fashion products, principally footwear. The customers include JD Sports, Scotts and Bank as well as third parties. Its results are consolidated with those of the Fashion Fascias and its external revenue is less than £1 million ($1.5 million).
SPORTS FASCIAS
The Sports Fascias' total revenue increased by 5.0% during the period to £571.8 million ($834.3 million), compared to £544.4 million ($794.3 million), including revenue from Topgrade Sportswear of £12.6 million ($18.4 million), compared to £2.6 million ($3.79 million) in 2008, an end of line wholesaler acquired in November 2007. Like for like sales in the retail Sports Fascias for the year were up 3.3%. Gross margin was unchanged at 49.8%, but included in this was dilution of 60 basis points from Topgrade's end of line wholesale business.
The performance of principal Sports Fascias, JD and Size, has continued to be strong during the last year as a result of the current management team's continuing and consistent strategy over the last five years of eliminating underperforming stores, improving gross margins and reducing terminal stocks.
In addition, the group has continued its program of store development with 16 new JD and 2 Size store openings and 32 store refurbishments. This substantial refurbishment program started in 2007 and will continue at a slower pace through 2009. The store refurbishments often result in full store closures for a number of weeks but we expect this to be justified by their subsequent performance. 18 stores were closed in the period including one which was transferred to the Fashion Fascias.
Topgrade made a negligible contribution to the operating profits of the Sports Fascias in both periods. It was bought with the intention of adding to its existing operation a new business selling sports and fashion brands at discounted prices through catalogues and online. This has been launched as Get The Label after the year end.
GROUP PERFORMANCE
Revenue
Total revenue increased by 13.3% in the year to £670.9 million ($978.8 million), compared to £592.2 million ($864.0 million) in 2008 as a result of the Group's positive like for like sales performance of 3.9%, combined with a full year's revenue from the Bank and Topgrade acquisitions made in the prior year as well as a small contribution from the newly acquired Deakins.
Gross margin
Group gross margin improved marginally to 49.3% (2008: 49.2%). In the light of dilution from both Topgrade and Deakins, this was a satisfactory performance but the best opportunities for future margin enhancement now exist in the Fashion Fascias.
Overheads
Selling, distribution and administration overheads (excluding exceptional items) reduced to 41.3% of sales (2008: 42.0%) driven by store efficiencies and performance. Certain central overheads including buying and merchandising, own brand design, marketing and IT costs have risen at well above inflationary levels during the past year and to date this investment has helped us to achieve better results. The Board believes that if a continuing return is not being made then overhead can be cut back and also that distribution efficiency can be
increased over time.
Operating profits and results
Operating profit (before exceptional items) increased by £10.5 million ($15.1 million) to £54.5 million ($79.5 million), compared to £44.0 million (64.2 million), a 24% increase on last year. Group operating margin (before exceptional items) increased to 8.1% (2008: 7.4%).
Following an increase in the exceptional items to £16.3 million ($23.8 million), compared to £8.4 million ($102.9 million) in 2008, Group operating profit rose slightly from £35.6 million ($51.9 million) to £38.2 million ($55.7 million.)
CONSOLIDATED INCOME STATEMENT for the 52 weeks ended 31 JANUARY 2009 52 weeks to 53 weeks to 31 January 2009 02 February 2008 Continuing Continuing Note Operations Operations £000 £000 Restated – Note 5 revenue 670,855 592,240 Cost of sales (340,309) (300,813) gross profit 330,546 291,427 Selling and distribution expenses – normal (256,315) (225,994) Selling and distribution expenses – exceptional (8,201) (8,404) Administrative expenses – normal (20,867) (22,500) Administrative expenses – exceptional (8,122) – Other operating income 1,109 1,086 operating profit 38,150 35,615 Before exceptional items 54,473 44,019 Exceptional items 2 (16,323) (8,404) operating profit 38,150 35,615 Share of results of joint venture before exceptional items (net of tax) 3 (166) (145) Share of exceptional items (net of tax) 3 914 – Share of results of joint venture 3 748 (145) Financial income 529 297
