Shares in JJB Sports plunged 9 per cent yesterday after the retailer admitted the year had started badly, blaming poor sales of replica football kits and summer T-shirts.
The group, which is appealing against claims made by the Office of Fair Trading that it fixed the price of football shirts, said like-for-like sales slipped by 5.7 per cent in the 10 weeks to 4 April. Its shares fell 28.5p to 283.5p.
Tom Knight, the chief executive, said the company had lost about £1m in sales of replica football kits compared with this time last year but was confident it would more than make up for the shortfall once the European football championships kick off in June.
Mr Knight expects 2004 to be a "bonanza" year for its replica business, which he expects to grow by £10m to £90m. New shirts for most of the teams playing in Euro 2004, as well as tops for Manchester United, Liverpool, Arsenal and Real Madrid, would boost sales, he said.
The company, which sold its TJ Hughes discount chain last year to focus on its main business, plans to step up the rollout of its fitness club business. Mr Knight said there was scope to open up to 100 fitness clubs, which it runs on the ground floor of its out-of-town superstores, over the next six years. It intends to open seven combined sites this year - taking its estate to 23 - and another 13 next year.
The group defended accusations that it was putting its core sports-store business at risk by diversifying into health clubs. "We are not going into health clubs. We are going into combined health club/superstores. Our new sites will be retail-led; there is no question about that whatsoever," Mr Knight said. He added that the combined sites were "extremely profitable".
The company reported pre-tax profits before exceptional items and goodwill amortisation of £88m against £90.3m a year earlier. As promised, it hiked its dividend payout by almost 40 per cent to bring it in line with other FTSE 250 retailers. It intends to increase its dividend in line with its earnings, it added.
JJB, which is chaired by David Whelan, said it had made no provision to pay the £8.4m levied by the OFT last year because it was "confident" of a successful appeal.
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