JJB Sports reports 30% profits slump

JJB Sports showed the impact of the toughest trading conditions in years today as it unveiled a 30% slump in annual profits.

The group said cautious shoppers had fuelled a battle among high street operators – and warned trading would remain difficult throughout its new financial year.

The fall in underlying profits to £63.3m (€92.6m) was in line with revised expectations following a profits warning in January. Same-store sales at the core JJB chain were 1.2% lower in the 10 weeks to April 10, unchanged on the year to January 30.

Chairman David Whelan said: “Trading conditions are as difficult as any I have known for some years. It is quite clear that consumers have tightened their belt and that this is fuelling competition between retailers.”

He said the group had reduced its clothing stock by more than £20m (€29.3m) as part of a series of measures to boost its competitiveness, although this hit margins.

JJB operates from 438 outlets, including 189 out-of-town superstores and 123 smaller high street shops.

It was upbeat about plans to expand its health clubs business, which currently includes 24 clubs and expects to have 39 sites by January 2006. The chain has about 100,000 members at the moment but hopes to eventually have a million.

Despite the profits fall, Mr Whelan said JJB had a very strong cash-flow to support the expansion of its leisure division. The company also plans to open a further 15 superstores this year.

JJB is one of a series of high street operators to be hit by a slowdown in spending as consumers feel the impact of a series of interest rate rises last year.

A survey from the British Retail Consortium showed earlier this week that underlying consumer sentiment had not changed despite an early Eastr drawing shoppers back to the high street.

Group sales fell 16.8% to £773.3m (€1.1bn) and the final dividend was left unchanged at 7p.

At the bottom line, pre-tax profits fell to £50.4m (€73.75m) from £67.8m (€99.2m).