JD warns of more trouble in store for the high street

JD Sports Fashion added to the anxiety of retailers yesterday, warning it was "extremely cautious" about its outlook for the sector, despite posting a sharp jump in annual profits to nearly £80m.

In addition to the ongoing squeeze on consumer spending, the sportswear retailer also said the recent rise in VAT means its sales will be £16m lower for the 12 months to 28 January 2012, if it achieves the same level of gross sales as last year. Peter Cowgill, the chairman of JD Sports Fashion, said: "Simultaneously, but quite separately, we anticipate a reduction of real expenditure levels by consumers at a time when product costs, particularly imported goods, are increasing at a material rate."

Given the late timing of Easter, JD said it was difficult to gauge trading in the early part of its new financial year, though the group's underlying sales, including online, inched up by 0.4 per cent for the eight weeks to 26 March.

But Mr Cowgill blamed the fiscal changes mentioned for a decline in net sale and margins over the period. In a thinly-veiled attack on the tax burden imposed by the Government, he said: "Following successive years of record results for the group, the retail environment has recently been significantly impacted by adverse fiscal changes in addition to the multiple current economic pressures. "

He added: "Our core business already possesses very strong sales densities and margins, being the result of continual growth in both measures for several years. Against that background, therefore, it is inevitable that the board is extremely cautious in its outlook, particularly when the profits achieved for the year to 29 January 2011 are effectively rebased purely as a result of the impact of increased VAT."

His downbeat views on the year ahead follow a series of profits warnings from retailers, including Mothercare, HMV and Dixons Retail, in recent weeks, as consumers sharply rein in their spending in the wake of record petrol prices, fears over, and actual, job losses and tax rises. Flying Brands, the mail-order gardening goods business, added its name to that list yesterday, with a profits warning of its own.

Despite these pressures, JD delivered its seventh successive year of "good progress" on sales and profitability.

While its rival JJB Sports has been struggling for the past two and a half years, the group has continued to grow strongly. JD pulled out of talks to buy the beleaguered JJB last month after complaining it had received "only limited non-public information".

JD's sustained growth has been driven partly by its exclusive relationships with brand giants such as Nike and Adidas that enable it to get the latest ranges in its shops before other chains. But JD has also benefited from robust demand for its own brands Carbrini, McKenzie and Duffer, which typically deliver enhanced margins. For the 52 weeks to 29 January, the group's pre-tax profits rocketed by 28 per cent to £78.63m, on revenues up by 15 per cent to £883.67m.

Its sales received a modest boost from its acquisitions of the Sonnetti, Chilli Pepper and Nanny State brands. The retailer operates 563 stores, including the eponymous JD outlets and Size? trainer shops, Bank and Scotts fashion chains, and 76 stores in France under the Chausport banner.

Carly Syme, a retail analyst at Verdict, said: "It's the JD Sports business that is driving its success, rather than its other fascias, with its offer of branded and own-label products in aspirational store environments. Storeopenings in key locations including airports and train stations have also helped boost footfall and sales."

Cautious consumers

Consumer confidence remains at historically low levels, but has picked up slightly over the past month, data published by the Nationwide Building Society revealed today. It said consumers had responded positively to the continuation of low interest rates last month and also that they felt marginally more optimistic about the prospects for their household finances this year. Even so, the 13-point rise in confidence, on the scale Nationwide uses, was lower than the dip seen in February.

'After a fairly dismal start to the year, there was some respite in March with consumer confidence picking up from the record lows seen in February,' said Robert Gardner, Nationwide's chief economist. The building society added that its survey had been conducted before the Budget last month.

Suggested Topics
News
Emma Watson has become the latest target of the 4Chan nude hacking scandal
people
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
David Moyes and Louis van Gaal
football
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
PROMOTED VIDEO
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
life
Life and Style
life
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Worldwide ticket sales for The Lion King musical surpassed $6.2bn ($3.8bn) this summer
tvMusical is biggest grossing show or film in history
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
News
i100
Life and Style
food + drink
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits