JD Sports Fashion, the clothing and sportswear group, is to seek millions of pounds of compensation for damage to its stores in the recent riots, though it has managed to rise above the high-street gloom with strong sales.
JD warned that trading conditions on the high street are "extremely volatile", as it posted an uptick in its most recent underlying sales and a leap in half-year profits.
The group said it was seeking compensation of about £2m from the riots after looters made off with £700,000 of stock, damaged 16 stores and caused it to forgo profits of more than £1m amid business disruption. Peter Cowgill, the executive chairman of JD, said its shops were disproportionately looted – though he said this was at least affirmation of the strong demand for its trainers, sportswear and clothing.
"The reason we are successful on the high street is because we have the best brands," he said. "There is no doubt about it – that was why were targeted," he said.
JD's stores in London were hit more than most with six "suffering verysignificant theft", but outlets in Birmingham, Manchester and Nottingham were also damaged. The retailer's store in Woolwich, south-east London, was set on fire and has not yet reopened, although all its other shops were trading by 21 August.
Over the 26 weeks to 30 July, JDincreased pre-tax profits by 20.6 per cent to £20.07m, continuing its strong momentum over recent years. The rise was driven by a strong performance from its fashion chains Bank and Scott, where underlying sales grew by 3 per cent. Mr Cowgill singled out the contribution by Bank and its "very strong female offer and a good mix of brand". JD acquired Cecil Gee, the fashionretailer, in late June.
Total sales at JD jumped by 14.6 per cent to £439.8m, boosted by its recent acquisitions. In the latest trading period, the group's acquisitions included the Sprinter business in Spain and Champion Sports in the Republic of Ireland, as well as the Fenchurch and Peter Werth brands.
Mr Cowgill said: "We continue to look for appropriate acquisition opportunities, which can deliver additional sources of future earnings growth principally in overseas sports retail but also to complement our core retail fascias." But like-for-like sales at its sports chains declined marginally, which meant the group's underlying sales, excluding VAT, fell by 0.9 per cent over the 26 weeks.
However, JD's current trading has picked up with group like-for-like sales rising by 1.6 per cent over the seven weeks to 17 September. But Mr Cowgill said this was not down to any improvement in consumer spending. "Anyone who counts on that will count on it at their peril," he said. "At the moment, the market is extremely volatile."
Hefty discounting on the high street and pressure on household incomes contributed to JD's customers buying a higher proportion of lower-margin products. This resulted in a small fall in the the group's gross margins, to around 48 per cent over the half year. However, Mr Cowgill said the outcome on margins would have been worse for JD if it had not improved its stock management systems.
The group raised its interim dividend by nearly 8 per cent to 4.10p a share.Reuse content