For its fiscal first half, British sporting goods retailer JJB Sports plc felt the margin pressures that accompany a highly promotional environment pull its bottom line below last year’s level, despite a double-digit increase in sales and a high-single-digit increase in comp store sales.

Net revenues increased 12.1% to £381.6 million ($686.1 mm) for H1 from £340.4 million ($632.2 mm) in the same period last year, with same-store revenues increasing 9.5%. Gross margins decreased 150 basis points to 48.0% from 49.5% during the first half of 2005. Nonetheless, operating profit increased 4.5% to £18.4 million ($33.1 mm) for the first half of 2006, up from £17.6 million ($32.7 mm) last year; but, an increase in taxes and finance costs brought the bottom line down for the period, with diluted earnings per share of 5.55 pence (10 cents), decreasing 22.9% from 7.20 pence (13 cents) last year.

Revenues from the company’s retail stores increased 7.5% to £323.5 million ($581.5 mm) from £300.8 million ($558.7 mm) last year. However, the margin pressure affecting the company as a whole was felt most acutely in the retail division where gross margins fell 230 basis points to 44.4% of sales from 46.7% last year. The margins decrease forced operating profit down 5.8% to £11.6 million ($20.8 mm) from £12.3 million ($22.8 mm) last year.

Revenues in the company’s leisure division increased 46.9% to £58.2 million ($104.6 mm) from £39.6 million ($73.5 mm), while operating profit jumped 30.6% to £6.8 million ($12.3 mm) from £5.3 million ($9.7 mm) in last year’s first half.

The company’s largest product category in terms of sales was textiles, which accounted for 32.2% of sales in the first half. Though its share of sales was down slightly from last year’s 33.7%, absolute sales increased 2.8% to £104.2 million ($187.2 mm) from £101.4 million ($188.7 mm) during H1 last year. Footwear saw its share of sales decrease 2.5 percentage points to 30.4% of sales, or a decrease of 0.6% to £98.3 million ($176.8 mm). Replica kit sales increased 22.5% over last year’s first half to £53.1 million ($95.4 mm), while increasing its share of sales 4.2 percentage points to 16.4%. Replica kits benefited from the FIFA World Cup, which occurred during the first half and was said to have fueled an increase of £14.1 million in sales over the same period last year. The equipment and accessories category saw sales jump 34.0% to £49.2 million ($88.4 mm) with an accompanying 0.8 point increase in share to 15.2%. Golf and cycles sales decreased 8.3% in Pounds to £18.8 million ($33.7 mm) from £20.5 million ($38.0 mm) on a full percentage point decrease in share of sales to 5.8%.

In discussing its acquisition of Golf TV Limited, which occurred in May, management said that the division has added £1.28 million ($2.3 mm) in revenues, but posted an operating loss of £220,000 ($395,500). Management said that they intend to re-brand the Golf TV Pro-Shop Channel as ‘JJB Sports TV’ with an extended product range.

During the first half, the company opened five combined health club/superstores as well as 6 other stores, while closing ten. On July 30, the company operated 439 stores in total, with plans to open an additional seven health clubs/superstores in the second half.

For the second half to-date, the retailer has seen revenues increase 8.8% on both an overall and a comparable store basis. Increases were said to have come from all retail store product categories with a “strong performance” from the launch of new replica kits from several Premiership Clubs.