JD Sports Fashion Plc, which is reportedly considering a bid for the United Kingdom’s 55-store Go Outdoors specialty chain, reported record profits on a 20-percent surge in revenue in the 26 weeks ended July 30.
The U.K. retailing group reported revenue reached £970.6 million ($1.22 billion) as it opened 20 of its own stores across Europe and added another 224 by acquiring retailers in the Netherlands and Portugal. Same-store sales across the group, which comprises 953 stores in its Sports Fashion segment and 180 in its Outdoor segment, increased 10 percent.
At the company’s Sports Fashion segment, which sells apparel, footwear and accessories, revenue jumped 21 percent to £897.5 million, gross margin grew 70 basis points to 48.4 percent and operating profits surged 53 percent to £79.9 million.
“The favourable trends for athletic inspired footwear and apparel in Europe have continued into this year,” said Executive Chairman Peter Cowgill. “We are very much at the center of this market, with our success being a positive consequence of the investments we have made over a number of years to develop the JD retail concept.”
Cowgill added that key brand partners continue to support the company’s aggressive expansion overseas.
“Although the U.K.’s vote to leave the European Union means that there will be some uncertainties over the next two or three years, we have no doubt that we have the support of our brand partners to continue our expansion in Europe and beyond.”
At the Outdoor segment, operating losses before exceptional items improved to £2.3 million, versus £4.5 million in the first half of 2015. JD Sports Fashion acquired that business, which consists of the Millets and Blacks chains, out of bankruptcy in 2012.
“There has been a small improvement in margin as we start to see the benefits of aligning the merchandising and commercial disciplines of the Outdoor team with the core JD team,” Cowgill said. “More material improvement in margin will be a core deliverable over the longer term and will require brand support, particularly in terms of enhanced levels of product differentiation.”
The British financial press reported in mid-August that JD Sports Fashion was considering bidding on Go Outdoors, a private equity backed outdoor specialty retailer that hired KPMG in May to help it assess strategic options for financing growth.
JD Sports Fashion ended the period with in excess of £200 million in cash to fund future expansion, including an £18-million expansion of a warehouse in Kingsway. Inventories were valued at £296 million, up 17.9 percent from a year earlier.
Photo courtesy JD Sports Fashion
