The Week Ahead: Updates due from JD Sports Fashion, French Connection and Smiths Group

JD Sports Fashion reports interim results on Wednesday this week.

JD Sports Fashion reports interim results on Wednesday this week. - Credit: PA

The latest snapshots from the retail sector will come from JD Sports and French Connection when they present half-year figures this week.

An unpredictable summer for sports retailers following England’s miserable World Cup is likely to be highlighted by JD Sports Fashion on Wednesday. The group, which has around 800 outlets in four countries across a number of shop brands, said in June that trading was strong in the run-up to the tournament – before England’s early exit.

JD’s dependency on replica kit sales during major tournaments has been significantly reduced in recent years but analysts will be keen to find out more details on summer trading in half-year results on Wednesday.

Rival Sports Direct said last week that there had been some stronger weeks helping to offset the blow to replica kit sales caused by England’s short appearance at the World Cup.

The focus on JD’s results announcement will also be on its outdoor brands Blacks and Millets, which have been showing signs of recovery, albeit against weak comparatives last year. JD bought Blacks and Millets out of administration in January 2012 but has found it harder than expected to turn the stores around.

Last year sales at both outdoor brands were held back by “significant” discounting, while JD’s fashion stores, such as Scotts and Bank experienced a varied performance during the half-year period. However, the group said recently it expected “a satisfactory increase in first half profitability in line with our expectations”.

The group has been set a high bar after the country’s biggest sports chain, Sports Direct, posted gross profit up 11.8% to £301.2million in the quarter to July 27.

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Investors will also expect an update on any successor to chief executive Barry Bown who stepped down suddenly in May after 30 years at the group. In the interim long-standing executive chairman Peter Cowgill has taken the helm. JD Sports said the departure was amicable and that Mr Bown would continue to act as a consultant to the business.

Brokers at N+1 Singer said JD Sports was on course to report an adjusted full-year pre-tax profit up 9% to £81.3m.

Fashion chain French Connection is expected to show further progress towards its turnaround when it posts half-year figures on Thursday.

The group, which has around 130 stores and concession outlets in the UK and Europe, said its European like-for-like sales lifted 9.1% in the 15 weeks to May 10. But it warned that weakness in the US fashion market meant its business in the region was likely to trade below expectations this year.

French Connection, which was founded by chairman Stephen Marks in 1969, has been trying to turn itself around since 2012, including through the closure of under performing stores, better designs and less discounting.

Brokers at Edison point out that the fashion chain closed 11 stores last year, and has plans to close between three and five stores this year.

Mr Marks said the group was on the “right path” in May after benefiting from the input of a new design team, and the growth of its online business which now accounts for 20% of group sales. He added: “We are also encouraged by the early response to our Winter collection.”

The company said its order book for its latest Autumn/Winter collection was ahead of this time last year, while its European wholesale revenues were 8% up on a year ago.

However, analysts point out that last year the firm’s capital spending was just £800,000. Edison said: “While some recent results look encouraging, in an increasingly brand-focused world we ask will French Connection be able to step up store and brand investment to continue to compete effectively?” French Connection is expected to narrow its full-year loss to £800,000, from £6.1m a year ago.

Smiths Group, the world’s biggest maker of airport and port scanners, celebrated 100 years on the stock market in August but few investors are expected to cheer full-year results on Wednesday.

The City forecasts that pre-tax profits will be down 7.8% to £459m after the group recently admitted to challenging trading conditions at its detection business in May. Sales are also expected to fall 3.8% to £3billion.

Apart from its detection unit, the group added there were weak performances at both its medical devices business and Interconnect arm, which provides electrical components.

These units weighed down good performances at its John Crane oil and gas business, which is seeing strong demand form clients in the US, Middle East and Asia. Its Flex-Tek business, which makes components that move fluids and gases, also made good progress, driven by its aerospace order book and the US housing market.

The business added in May that a review of projects at its detection unit would result in a £12m charge on inventory, a possible £9m hit on full-year profits and £4m in cost charges on long-running contracts. Smiths also said that sterling currency translation will hit its full-year earnings by around 5%.

The group, which has seen its shares slide 9% since the start of the year, has long been seen as ripe for a break up of the business. Flex-Tech and Smiths Medical are often cited as two candidates to be sold off.