JJB Sports reports loss in profits

UK retail chain JJB Sports today pledged to cut its reliance on major football tournaments as it reported a halving of interim profits.

The group posted a 58% drop in half-year underlying pre-tax profits, which plummeted from the £19.9m (€28.3m) seen amid last year’s World Cup replica kit fever to £8.3m (€11.8m).

JJB said it would strive to become the “sports retailer of choice” in a bid to reduce dependency on tournaments, while revamping its stores, launching more own-branded products and upping its health club offering.

JJB, the UK's second largest sports retailer, said that second half trading had got off to a ``very strong start'', but cautioned over full-year results.

The firm warned earlier month that full-year profits would be as much as a quarter less than expected, at around £35m (€50m), sending shares to a two-year low.

Like-for-like revenues rose 5% in the eight weeks to September 23, helped by better weather in August and September and new Premiership kits launched, according to JJB.

However, the retailer stuck by its gloomy full-year outlook, as it stressed the recent interest rate hikes could yet knock consumer spending.

Roger Lane-Smith, chairman of JJB Sports, said the retail division had performed worse than expected in the first six months of the year, leading to “disappointing” results even in light of the anticipated tough comparatives from the 2006 World Cup.

JJB’s interim figures reveal that like-for-like revenue for the group dropped 4.4% in the six months to July 29, despite a 21% revenue lift from its burgeoning health club business.

The group’s stores saw total revenue dive 6.2%, although stripping out the impact of replica kit, the fall was 1.3%.

JJB’s figures come in stark contrast to that of rival JD Sports, owned by John David Group, which reported a more than doubling of interim profits earlier this week.

But JJB has not been alone in feeling the pinch from a squeeze on the sportswear retail sector, with football shirt maker Umbro warning recently that its full-year profits would take a hit following weak demand for new England shirts.

Sports World owner Sports Direct International also said it had suffered from poor trading during the soggy mid-summer weather.

JJB today outlined an action plan to get profits back on track, led by recently appointed chief executive Chris Ronnie.

Mr Ronnie took the top job in August after a series of management changes sparked off by JJB founder David Whelan’s move to sell his family’s entire shareholding to a joint venture formed by Mr Ronnie and Icelandic group Exista.

The group’s new boss is trialling a new look retail layout and plans to boost its combined health club superstore outlets, with five more set to open before the end of January and a further 14 next year.

The group now has 43 health club retail offerings, including six soccer centres, which add to its 420-strong chain of stores.