JJB Sports, UKs largest sports retailer, announced its interim results for the 26 weeks to 31 July 2005. Revenue Dropped 6.2% to £340.4 million ($637.6 mm). Operating Profit fell 35.8% to £17.6 million ($33.0 mm).
2005 2004* Change Revenue £340.4m £363.0m -6.2% Gross margin 49.5% 48.1% +140 bps Operating profit £17.6m £27.4m -35.8% Earnings per share 7.20p 8.24p -12.6% Interim dividend 3.0p 3.0p
- Like-for-like revenue decreased by 8.8% in the face of difficult trading conditions and strong competition on
the high street, together with the impact of replica kit sales during the Euro 2004 tournament in the comparative
figures for which there was no equivalent competition in 2005.
- The gross margin increased due both to a slightly higher gross margin obtained in the retail stores together with
increased health club revenue on which a materially higher gross margin is achieved.
- Operating profit fell from £27.4 million to £17.6 million. 2005 operating profit benefited from a change in the basis of calculation of depreciation of £4.3 million, and from the creation of provisions relating to the OFT
penalty of £1.3 million (2004: restated £NIL).
- The increased rate of expansion within the Leisure Division has seen an increase in revenue of 37.8% and an
increase in operating profit, before a share of head office and distribution centre costs, from £4.5 million to £7.6 million, benefiting from the change in the calculation of depreciation of £1.6 million.
- The interim dividend is maintained at the same level as last year.
- Current trading conditions continue to be difficult, although the decrease in like-for-like revenue for the 10 weeks to 9 October 2005 was 4.3%, an improvement over the results for the 26 weeks to 31 July 2005.
Commenting today, Roger Lane-Smith, Non-Executive Chairman, said, “These are the first results since I was appointed Chairman in July and it is disappointing for me to present results which show a lower profit than that achieved last year. However, JJB, along with many other retailers, cannot escape the effects of what is clearly an economic downturn in the retail industry which in turn leads to margin pressure as retailers seek to maintain market share.
“In the shorter term and particularly during the remainder of the current financial year, I see very few encouraging signs within the retail industry that would indicate an imminent end to the difficult trading conditions and strong competition that we are currently experiencing. In our core business, I believe we are pursuing the most appropriate strategy to position JJB for improved performance in this difficult market which is to supply quality sports related products from the major brands, supported by value-for-money products under our own brands. Only JJB offers a full sporting retail experience from our wide range of branded clothing, footwear and equipment. I remain very impressed with the performance and potential of the Leisure Division. The development of combined health clubs and superstores is an area which clearly differentiates JJB from its competitors and is an area which has considerable growth potential at highly attractive gross margins.
“Since I was appointed Chairman, I have spent a lot of time at the Company and with all JJBs senior management, in order to become better acquainted with the business and have formed the firm conclusion that the current policies and strategies being actioned by the Company are appropriate in the current environment and will put the Company into a solid position to take advantage of any improvements in the retail climate”.