As the consumer climate continues to improve, sports retailers in particular are noting a considerable uptick in sales due to customers spending more on gym equipment and sportswear. This, along with an international expansion programme, has allowed high street retailer JD Sports to post an encouraging 22 per cent rise in full year profits.
The wider JD Sports Fashion group, which also owns outdoor retail brands including Scotts and Blacks, revealed that in the year to the 31st of January 2015 profit before tax and exceptional items climbed to £100 million.
Although the group had already raised profit expectations due to a very strong Christmas trading season, the final result was still 6 per cent ahead of analysts’ forecasts, marking one of the best performances by the group in several years.
In part, the success of the JD Sports brand can be put down to the rapid expansion programme initiated by executives during the first half of last year. While the vast majority of the group’s 850 stores are located in the UK, it has begun to branch out to neighbouring countries such as France, Germany, Spain and the Netherlands which allowed European like for like sales to grow by 13 per cent during the period.
Group executive chairman Peter Cowgill indicates that further growth is on the cards, saying; “This result and its ingredients provide a robust platform for further profitable growth, at home and internationally.
“I think athletic apparel and footwear is very much on trend and we are the leading light – it’s part of a lifestyle development.
“There’s an emergence of a youth culture that protracts into a higher age range than previously.”
Not all aspects of the report were entirely positive as the group’s outdoor division posted an operating loss of £3.1 million. However, this is a significant improvement upon the £4.9 million loss recorded during the same period last year and was somewhat bolstered by the 13 per cent sales rise in the sports and fashion businesses, which were in turn aided by the group’s sale of the struggling Bank fashion chain to restructuring specialist Hilco in the latter part of the year.
The results are particularly impressive given the strong competition from main rival Sports Direct, which is owned by Newcastle United boss Mike Ashley. While previous comments made by Mr Ashley alluded to “finishing off” rival brands, JD Sports responded by targeting consumers at the top end of the market, investing in luxury stock and developing stronger relationships with suppliers as a means of acquiring exclusive lines and new products ahead of the market.
Mr Cowgill responded to Mr Ashley’s comments by saying; “We smile and carry on.
“The marketplace is relatively settled and well served by two occupants who are at different ends of the market.
“We appeal to a more aspiring youth culture, while Sports Direct appeals to a broader, lower-end base.”
Following the release of the results, JD Sports’ share prices rose to an all-time high of 541.4 pence.
Do you think this report demonstrates JD Sports’ ability to fight back against the dominant Sports Direct?