Trends & Features

Tale of two high street retailers

Two sets of preliminary results have revealed differing fortunes for two of sports retails biggest high street names.

While The JD Group was reporting a 103 per cent increase in profit before tax (£35 million, compared to £17.2 million in 2007) and a 61 per cent increase in operating profit in its preliminary results for the 53 weeks to February 2, rival JJB revealed a 71.1 per cent drop in operating profit and the closure of 72 stores in its results for the 52 weeks to January 27.

JD’s total revenue increased by 11.6 per cent during the period to £592million, a result, says Peter Cowgill, the company’s executive chairman, of a further period of substantial progress for the group with excellent organic sales and margin enhancement.

Says Cowgill: “Group profit before tax has increased by over 100 per cent in the year through strong buying, merchandising and own-brand performance.”

However, Cowgill went onto sound a cautious note: “The group’s strong performance with regards to like-for-like sales and gross margins means that further improvement in these areas is becoming more challenging. Furthermore, despite recent and current performances, the current economic climate and outlook dictates a note of prudence. The board is therefore cautious about the extent of future growth in earnings.”

Over at JJB, chairman Roger Lane-Smith said the beleaguered retailer is taking “significant action to improve the performance of JJB’s retail stores”, which includes the planned store closures, which will cost the company an estimated £25million, and further commitment to increasing the proportion of retail store revenue from own-brand products such as Champion and Travel Fox.

The company saw operating profit plummet to 11.3million, compared to £39million in 2006/07.

Says Lane-Smith: “Whilst we have identified a number of stores for closure, which will itself strengthen our remaining store portfolio, we are also investing to improve the quality of our stores and product with further store refits, the introduction of new products from our own brands and the implementation of staff training and incentivisation programmes. We also plan to continue to open more combined fitness clubs and superstores, which continue to deliver strong results.

“Whilst we expect current difficult market conditions to continue to affect consumers in the short term, we believe the action we are taking represents a turning point for the company, which will benefit performance over the medium term.”

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