Pre tax profit rose 9 per cent to £38.2m at JD Sports Fashion (LSE: JD.) in the year to January 31 as the Bury-based retailer continued to buck the trend of declining high street retail spending.
Turnover was up 13.3 per cent to £670.8m in a performance which underlines the huge gulf between JD and Wigan-based JJB Sports Plc (LSE: JJB), which is expected to report a £10m loss for 2008 and whose survival depends on a deal with its landlords.
JD said that despite current market and economic conditions, group like for like sales were 0.3 per cent up in the nine weeks to April 4, with a 0.2 per cent decline at the sports shops made up for by a 3.6 per cent gain in fashion. Last year’s figures included the busy Easter period.
The shares were up nearly 10 per cent in early trading today, rising to 395p.
Profits in 2008 would have been even higher but for £16.3m of exceptional items which, ironically, included a write-down on the group’s 10 per cent stake in JJB. Before tax and exceptionals, profits were up 24 per cent to £53.6 but in the previous two years the increase was 73 per cent and 51 per cent.
JD’s like for like revenues were up just 3.9 per cent, with the sports shops adding 3.3 per cent while the Scotts and Bank fashion chains did better with 7.9 per cent. Overall gross margins increased to 49.3 per cent compared with 49.2 per cent the year before.
Nearly all of the group’s profits were made in the sports stores. The Bank chain of 54 fashion shops, which JD wants to roll out with more openings, made an operating profit of £1.2m while Scotts, where underperforming stores will be disposed of, made an operating loss of £1m.
The final dividend is going up 48 per cent to 8.9p, bringing the total for the year up to 12.0p compared with 8.5p in the prior year.
JD said its net cash had doubled at the year end to £23.5m despite £30.1m of capital spending and acquisition and investment costs of £9.4m.
Peter Cowgill, executive chairman, hailed the fifth successive year of “good progress” in revenue and profitability.
Cowgill said the sports shops’ strong performance in recent years made it “increasingly challenging” to grow like for like sales and gross margin.
“Nevertheless the new year has started satisfactorily and we have a well differentiated proposition,” he added.