Blacks business will be in loss – JD Sports Fashion

JD Sports Fashion Plc releases the following Interim Management Statement for the period to 9 June 2012.

Interim Management Statement:

In the Preliminary Announcement of the Group's results for the 52 week period ended 28 January 2012, issued on 12 April 2012, the Group reported like for like sales growth of 1.2% in the core UK and Ireland fascias for the 9 weeks to 31 March 2012 (Sports Fascias +1.0%; Fashion Fascias +2.3%).

Trading since then has continued to be in line with expectations.

The cumulative like for like sales for the 19 weeks ended 9 June 2012 have improved marginally to +1.5% (Sports Fascias +1.2%; Fashion Fascias +3.0%). As anticipated gross margin has continued to be under  pressure in an offer driven market. This margin pressure and the additional overhead within the group to support International Retail, Brands and Licensing and Multichannel Development will as previously reported impact the core retail results, particularly in the first half. 

In the Preliminary Announcement we also announced that Blacks had delivered an operating loss of £2.2 million in the three weeks post acquisition to 28 January 2012, reflecting the lack of stock in the business and the inheritance of an excessively large and over rented store portfolio, together with a disproportionate central cost which will not be fully eliminated until early in the next financial year.

We are presently continuing to address the significant operating issues in turning round the business. The anticipated level of the operating loss in the Blacks business in the current year is £10 million with the potential for a further up to £5 million charge for restructuring. The bulk of the operating loss in Blacks will occur in the first half. Whilst the business continues to restructure its store portfolio and operate with legacy buying decisions, it is difficult to be more precise on the short term outlook, but we remain of the view that Black's market position can be exploited profitably in the medium term. Our immediate priority is to significantly improve the customer proposition.

The Board maintains its belief that the Group remains exceptionally well positioned to take advantage of any opportunities, both in the UK and internationally, with its retail propositions, brand connections, financial resources and management experience.

JD Sports Fashion