The Investment column: JD Sports loses out to rivals

John David Sports isn't the worst new issue of the last couple of years. But it's close. Priced at a top of the range 285p when it came to the market in October 1996, shares in the sports retailer have been a disaster. Yesterday's grim trading statement, showing collapsing sales and stock problems, dragged the shares down a further 16.5 per cent to a new low of 109p. Investors must be livid with John Wardle and David Makin, the two founders who netted a cool pounds 13m apiece from the float.

It is clear that in an increasingly competitive sports retail market JD Sports has proved the loser. While JJB Sports, Sports Division and Blacks Leisure power ahead, JD Sports has struggled. It has paid the price for drifting towards stocking too many secondary brands and losing its competitive edge as a more fashion-oriented alternative to more mainstream rivals.

Stock problems were one of the company's difficulties, with buying mistakes meaning that excess merchandise had to be sold off at discounted prices, crucifying the margin. Sales in the core business also seem to going through the floor. Like-for-like sales in the first half fell 8 per cent, albeit against tough comparisons. Current trading in the second half is even worse, with sales down around 10 per cent and margins still depressed by the slow moving stock.

All this makes one wonder just how the company managed to report a 10.4 per cent increase in pre-tax profits to pounds 5.5m in the half year to September. The extra profit must be coming from new store openings, although the company was playing these down yesterday and admitting that some were not achieving expectations.

Management has beefed up the group's buying and merchandising staff and is concentrating on a more fashion-oriented offering that will differentiate it from rivals.

With all these problems, it is worrying that JD Sports is persisting with its store roll-out programme. The company also admits the sports retail market is becoming increasingly competitive as rival groups march ahead with aggressive new opening programmes, pushing up rents.

On reduced full-year forecasts of pounds 10m the shares trade on a forward rating of just 8. That seems too low and if existing management does not improve shareholder value, it could be subject to a bid. Hardly one for widows and orphans but at these levels the shares could be worth a punt.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map