JD Sports scores 9% profit rise

The sports retailer's pre-tax profits hit £38.2m, while other retailers are misfiring. Back of the net...

Last Updated: 06 Nov 2012

Annual sales at the sports fashion retailer rose by 13%, to £670.9m, marking the fifth consecutive year of improved sales and profit for the company. Shares have nearly doubled this year, as the firm continued to beat expectations - which is particularly impressive given the state of play at most other high-street stores.

Notably, it's a stark contrast to what's going on over at JJB Sports. JD's high-street rival, in which it has a 10% share, has the banks on its back and is burdened by crippling rent demands - and it has just signed a Company Voluntary Agreement to take some of the pain away. Only a last-gasp sale of its fitness chains last month averted an ignominious collapse.

So why is one sports and leisure outlet tearing up the track as its main competitor barely stumbles out of the starting blocks? Executive chairman Peter Cowgill credits JD's strategy of closing 22 underperforming stores last year, while opening 27 new sites and completely overhauling 32 more. He also cites recent investment in merchandise planning systems and staffing.

It's probably also something to do with the fact that JD Sports is more about fashion these days - rather than chucking on their clothes to run around a muddy field, you're more likely to be donning them for a session of milling about the local shopping centres and youth clubs. And these yoofs aren't exactly the first to take a hit on their income when the downturn comes.

Whatever the secret, it just shows that a downturn doesn't mean every retailer will wind up performing at a Sunday league standard. With the right approach, there's still much to play for.

It certainly gives Sports Direct owner Mike Ashley reason to cheer. Ashley holds a 13.23% stake in JD Sports, so the news will help take his mind off events at his other high-profile interest, Newcastle United. The perennially underachieving football club needs some JD-style magic if it's going to avoid relegation from the Premiership this season.

The only question is whether JD can keep it up. Given the state of the market these days, posting continued improvements in sales and margins will probably prove tough for the sports retailer. It's also planning to offload more stores this year, and may well struggle to do so given the falling demand for retail property. Still, as they say in football, JD would take this position if it was offered at the start of the season. Which is more than you could say for JJB - or Newcastle United.

In today's bulletin:

Gordon Brown gives green light to Budget plans
JD Sports scores 9% profit rise
Much to learn for school managers as closures mount
British workforce getting older - and sicker
MT Breakfast Debate: The silver lining to Recession 2.0

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