JD Sports had warned that first-half profits would be hit by the cost of taking on Blacks Leisure, and today the strength of that blow became clear.
Pre-tax profit slumped 86% to £2.9m in first six months of the year, from £20.1m a year ago. The hit was mainly down to Black Leisure, the struggling outdoor clothing chain it bought from administrators for £20m in January. Losses at Blacks Leisure were £10m in the six months after problems with a lack of stock and an expensive store portfolio dragged on profit margins. The rest of JD Sports' profits fall was attributed to the cost of moving warehouses.
But the results came with a glimmer of hope on the horizon. JD Sports, which sells tracksuits, trainers and those ubiquitous replica football shirts, said that despite the first-half slump it remains well on track to hit full-year targets. Even the struggling Blacks chain is expected to break even in the second half. Almost 100 stores have been closed since January, leaving around 200 (although some of these still remain at risk).
And despite the high street downturn, JD Sports can take some comfort that people are still willing to shop at the chain's stores. Like-for-like sales were up 1.2% in sports and 0.7% in fashion. Last month JD Sports offloaded its rugby brand, Canterbury, to Pentland for £22.7m, which will also give the chain a much-needed boost in the second half.
Shares have also rallied in the past few months. JD's stock is around 728p this morning, up around 18% on three months ago.