JD Sports profits plunge after acquisition of Blacks
Retailer JD Sports has reported a plunge in profits as a result of “anticipated” losses from the acquisition of Blacks.
The sports clothing store suffered a loss of 8.2% like-for-like in its operating profits, while profits before tax shrank from £20.1m to £2.8m in the first half of 2012, like-for-like.
JD Sports blamed the loss on its acquisition of outdoor shop Blacks, after an initial loss of £10m through lack of stock and an unsustainable cost base.
Executive chairman, Peter Cowgill, commented: “I stated in April that the recent expansion activity in the Group, the relocation of distribution facilities and the resolution of the stock and property issues in the Blacks business would impact results in the short term.
“As expected, this has proven to be the case but it does provide the Group with a very positive platform for future development.”
Blacks is said to be stabilising, and JD Sports continues to expand business into the European market as they open stores in France and Spain,with a total of 10 new stores on the continent.
In the six months up to 28th July, the retailer also acquired Tessuti and Originals as it developed its premium male fashion section.
The company stated that it expected further losses due to the transaction with Blacks, and that a warehouse move to Kingsway had also had a negative effect.
Mr Cowgill concluded:“I am pleased to report that our primary JD fascia remains robust and we have increased our overseas presence with the intention of producing long term value for shareholders.
“The robust trading in the Sports Fascias has continued since the period end although trading in the Fashion Fascias has been more difficult.
“Notwithstanding the economic pressure on margin and the general increase in taxation and other levies across Europe, the Board believes that the Group is well positioned to deliver results that are within the range of current expectations.”
This was posted in Bdaily's Members' News section by Miranda Dobson .
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