JJB Sports profits plunge on weak retail sales

16-04-2008

JJB Sports profits plunge on weak retail sales
JJB Sports has blamed a 72 per cent fall in profits on a weak economic environment and strong comparatives.

Profit before tax was £11.3 million in the 52 weeks to January 27th 2008, compared to £39 million in 2007. The sports retailer added conditions were unlikely to improve in the short term.

Roger Lane-Smith, chairman, said: "We are taking significant action to improve the performance of JJB's retail stores.

"While 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."

Costs increased by eight per cent over the period, squeezing margins further. The combination of lower sales and higher costs led to lower operating profit of £49.4 million, compared to £60.3 million last year.

The retailer said it is closing underperforming stores, introducing staff incentive schemes and has spent £25 million on re-fitting stores across the UK.

In addition, the company is expanding its profitable chain of fitness clubs, which posted an 18.8 per cent increase in profits to £66.3 million over the 52 weeks.

Last year's results benefited from the 2006 World Cup. Over the last 52 weeks, revenue from England-related products fell by £23.4 million.

The revenue loss highlights the effect the England football team's failure to qualify for this year's Euro 2008 competition is likely have on profits this year.

The board has proposed to maintain the rate of the final dividend at 7p net per ordinary share.

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