UK: JD warns of further Blacks Leisure store closures
JD Sports Fashion warned today that it is likely to close more Blacks Leisure stores after the chain it rescued from administration contributed to a sharp fall in profits.
The group, which bought the Blacks business for �20million in January, has already closed 93 of the worst performing stores but a further 50 are still under threat as it targets long-term estate of around 150 sites.
It will also ditch the Millets name under plans to use Blacks, which sells own-brands such as Peter Storm and Eurohike, as its single outdoor fascia.
As expected, Blacks recorded a �10million loss in the six months to July 28, helping to cut JD’s profits to �2.9m from �20.1m a year ago.
However, with the business now stabilised and margins running ahead of expectations, it hopes Blacks will break-even in the second half.
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JD said it had inherited a business with a severe lack of stock in many core lines as well as an excessively large and over-rented store portfolio.
While the company sees a profitable future for the business, it warned that margins in the second half will come under pressure as a result of the need to clear camping products following the wet summer.
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Following the first round of closures, 198 Blacks and Millets stores are currently trading and JD said most of these would continue to trade until Christmas.
“However, the long term structure of the store base will depend on our assessment of the ongoing store performance relative to the newly negotiated rents and associated property costs,” it added. “However, we currently envisage progression to Blacks as the single fascia of the Outdoor division with a long term store base of approximately 150 stores.”
Today’s profits reduction at JD was also driven by the cost of transferring to a new centralised warehouse, which is now fully operational.
The group’s sports fascias, JD Sports and Size?, grew UK and Ireland like-for-like sales by 1.2% in a “robust” half-year performance, although operating profits for the division were �1.3m lower at �18.9m.
The 350 sports stores recorded growth of 3.2% in the UK and Ireland in the first six weeks of the second half but fashion brands, which include Bank and Scotts, saw a 6% fall in underlying sales over the same period.