JJB Sports reported that total Group revenues, including health clubs, for the 22 weeks ended 3 July 2005 were down 8.9% from the comparative period last year and included a 9.4% decline in comparable store sales. JJB said the results were affected by the very high levels of sales of football replica merchandise generated by the Euro 2004 competition during May and June 2004; if the sales of all replica merchandise are taken out of the total turnover figure, then the fall becomes 6.1%. The gross margin achieved in the retail stores wasmarginally lower than that earned in the comparative period last year, although the blended gross margin (inclusive of gross profits from the health clubs) is slightly higher than the gross margin earned in the comparative period.
JJB last issued a trading update on 26 May 2005 when it reported that its total turnover for the 16 weeks ended 22 May 2005 had fallen by 7.5%, when compared to the same period last year, and that this included a fall in like-for-like turnover of 7.7%. JJB advised that it was finding trading conditions to be difficult and competitive, although part of the fall in turnover levels had resulted from the strong comparative turnover figures from football replica merchandise sales, which included turnover generated by the Euro 2004 tournament.
Whilst trading conditions have continued to be difficult since 22 May, trade during more recent weeks has benefited from better weather; however comparative figures arising from the Euro 2004 tournament increased in difficulty until 23 June which was the anniversary of England being eliminated from the tournament. Total turnover for the 6 weeks ended 3 July 2005, (including that from the health clubs) fell by 11.7%, when compared to the same period last year, and included a fall in like-for-like turnover of 13.0%. If sales of football replica merchandise are taken out of the total turnover figure, then the fall in turnover for the 6 weeks ended 3 July 2005 becomes 2.2%.
Membership levels at JJBs health clubs continue to be entirely satisfactory. At 3 July 2005, JJB had 109,300 members in its 27 health clubs; the level of memberships at recently opened health clubs gives JJB confidence in its openings strategy which will include a total of 16 combined health club/superstores being opened during the current accounting period.
JJBs original store and combined health club/superstore opening program for the current accounting period is materially on target. In the 22 weeks ended 3 July 2005, JJB has opened 6 combined health club/superstores and, in addition, has opened 7 stand-alone superstores (of which 3 are relocations of existing superstores) and 3 smaller Icon stores. During this period, 5 superstores (including the 3 relocations) and 8 smaller stores have been closed.
The current forecast of total openings for the current accounting period is 16 combined health
club/superstores, 14 stand-alone superstores and 4 Icon stores. Icon stores are opened in former small high street stores which had traded as JJB and where the Company has been unsuccessful in disposing of the lease.
Commenting today, David Whelan the retiring Chairman said:-
“In the recent statements I made on 13 April 2005 and 26 May 2005, I referred to the difficult retail trading conditions in the UK which I believe we are still suffering from. When compared to last year, sports retailers have been particularly badly hit during May and June because of the benefit derived from the sales of football replica merchandise during the Euro 2004 competition, but these difficult comparative turnover periods are now behind us. In addition, and in common with all clothing retailers, I am hoping for better weather during July and August than that of last summer. The back-to-school period, occurring at the start of the football season will be an important time for us, as will the Christmas season. I do not anticipate any material improvement in retail trading conditions before Spring 2006 which I hope will be followed by a successful sales campaign during the 2006 World Cup in May and June of that year. I believe that the strategies which we have put in place and which were described in our Preliminary Results on 13 April 2005, will give us a better product offering than we had in the last accounting period and should put us in a better position to meet the challenges set by the UKs current retailing conditions. I am confident that the growth of our combined health club/superstore units will be a major factor in the growth of JJB in future years.”
