Millets and Blacks break even after JD Sports' rescue
Tuesday 15 April 2014
JD Sports’ rescue of Millets and Blacks has begun to pay off as the struggling brands broke even for the first time since they were salvaged two years ago.
The sports chain rescued the loss-making chain out of administration in January 2012 in a £20 million deal and has hired new management and teams, relocated its headquarters and warehouse, and improved stock.
Executive chairman Peter Cowgill said: “We have got our arms around the business and improved the strength of the offer. We expect continued progress.”
Blacks and Millets broke-even in the second half compared with losing £4.9 million in the same period of the previous year. It has also bought outdoor brand Tiso to bolster its share of the market.
The group, which has more than 900 shops in the UK and is growing its overseas arm, produced a 27% rise in group pre-tax profit for the full-year to £77 million. The star performer was its core sports business which reported a 20% jump in profit to £93.4 million and comparable sales up 6.7%.
But despite the turnaround at the outdoor business, JD has failed to improve its fashion division: it said that losses at the division had grown to £6.4 million from about £1.7 million for the previous year.
JD has attempted to turn around the fashion business by improving supply chains and its products. The fashion arm, which comprises Bank and Scotts and brand Tessuti, bought website Cloggs and chain Ark out of administration during the year. But Bank has proved particularly difficult and a new managing director has been drafted in.
Cowgill argued: “Fashion is a much smaller part of our business.
“We have seen a downturn in spending but we are putting the right framework in place to deliver an improved financial performance.”
Analyst Freddie George at Cantor Fitzgerald said: “Fashion losses will either be markedly reduced over the next two years or management will be under pressure to dispose of these activities.”
The group is looking at closing stores or renegotiating leases and said it needs to tackle “property costs which are excessive in some legacy leases.”
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