JJB Sports Plc warned on full-year profit after slumping to a first-half loss and axed its dividend for shareholders. The company said it expects underlying pretax profit for the year ended January 2009 to be about 15 million pounds ($27.6 million), down from previous estimates of 30 million pounds. JJB also expects tough trading conditions to persist until 2010.
The Wigan-based company reported a deficit before exceptional items of £9.7 million ($17.8mm) for the 26 weeks to July 27, compared with profits of £8.3 million ($15.3mm) a year earlier.
JJB remains “very cautious” about the trading outlook, but chief executive Chris Ronnie insisted that management would stay “calm and focused” over the rest of this financial year.
Retail revenues for the half-year were down 7% to £309.1 million ($569mm) as a result of the closure of 96 stores and a 4.2% drop in like-for-like sales. The same-store figure widened to 5.6% for the 34 weeks to Sept. 21.
The half-year loss also reflected losses at the Original Shoe Company and Qube, which JJB acquired at the start of the period. Performance at the two businesses was lower than expected, but JJB said it was pleased with the direction in which the businesses were going.
Gross margin improved 90 basis points, driven by the introduction of more of JJB’s own brands.
For the 34 weeks to Sept. 21, group sales were down 8.5 percent. On a like-for-like basis, sales were down 4.5 percent. Gross margins for the retail business was up over 300 basis points for the 34-week period.
JJB earlier this year closed 72 loss-making stores and cut 800 jobs. Last year, the group paid an interim dividend of 3.0 pence.
“We remain very cautious about the outlook for retail given the background of a weakening consumer economy,” said chairman Roger Lane-Smith.
