JD Sports Fashion Plc reported strong demand for international sports footwear brands helped propel it to record annual profits before taxes and exceptional items in the fiscal year ended. Jan. 31 despite a tough second half at its outdoor specialty banners.
The U.K.-based retailer, which operates 844 sporting goods and fashion stores under multiple banners throughout Europe, reported annual profit before taxes and exceptional items surpassed £100 million for the first time in the fiscal year ended Jan. 31 as sales from continuing operations grew 25 percent to £1.52 billion.
At its Sports Fashion segment,which operates 660 stores, operating profits (before exceptional items) from continuing businesses reached £107.0 million , up 18 percent from £91.0 million in the fiscal year ended Feb. 1, 2104. The growth was attributed to a 13 percent increase in same-store sales amid buoyant demand for branded athletic footwear across Western Europe. The segment also opened 19 new JD and Size? stores in Europe during the period, ending the year with 70 of those stores.
Operating loss at its Outdoor Segment which includes 184 stores operating under the Blacks, Millets, Tiso and other banners, reached £4.87 million on sales of £169.9 million. That compared with a loss of £7.98 million on sales of £111.9 million in the year ended Feb. 1, 2014. Executives said margins deteriorated in the in the second half of the year when very mild autumn and winter weather led to heavy discounting of seasonal products.
Consolidated results
On a consolidated basis, same-store sales from all the company's continuing retail banners, including those in Europe, increased by 12 percent compared with the fiscal year ended Feb. 1, 2014.
Total gross margin was stable at 48.6 percent as a 40 basis point increase in the margin in its Sports Fashion segment to 49.5% was offset by a decline at the Outdoor segment, where gross margin tumbled 340 basis points to 41.3 percent, reflecting the inclusion of a full year of the lower margin Tiso and ActivInstinct banners and the impact from heavier discounting in the final quarter of the year.
Operating profit (before exceptional items) increased substantially by £19.2 million to £102.2 million (2014: £83.0 million) with an exceptional performance in Sports Fashion and a reduction in the losses in Outdoor. A requirement to clear excess Autumn and Winter inventories means that whilst we anticipate that Outdoor will move towards profitability in the new financial year, it may be 2016/17 before this objective is achieved.
There were net exceptional items in the year of £9.5 million (2014: £5.2 million) which include a charge of £5.1m for the impairment of intangible assets previously recognized on the acquisitions of Blacks Outdoor Retail Limited, Kukri Sports Limited and Ark Fashion Limited. Ultimately, net cash balances improved by £38.9m in the year to £84.2m (2014: £45.3 million) although this was assisted by £16.5m of lease incentives received in the last two months connected with the acquisition of five former Kiddicare stores. The company ended the year with inventory valued at £225.0 million, up 20.9 percent from a year earlier.
Consolidated Income Statement
For the 52 weeks ended Jan. 31, 2015
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Note |
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52 weeks to 31 January 2015 £000 |
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52 weeks to 1 February 2014 (re-presented – see note 1) £000 |
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Continuing operations |
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Revenue |
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1,522,253 |
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1,216,371 |
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Cost of sales |
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(782,703) |
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(624,220) |
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|
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Gross profit |
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739,550 |
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592,151 |
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Selling and distribution expenses – normal |
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(564,333) |
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(455,657) |
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Selling and distribution expenses – exceptional |
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(4,467) |
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(5,164) |
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Administrative expenses – normal |
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(73,969) |
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(55,185) |
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Administrative expenses – exceptional |
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|
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(5,060) |
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– |
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Other operating income |
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