JD Sports Fashion is considering new opportunities for growth in the coming year – both potential acquisitions and international expansion – as its outdoor arm breaks even and the turnaround of its fashion chain Bank continues.
The sports giant this week reported group sales growth of 5.7% to £1.3bn for the year to February 1, with its outdoor arm breaking even for the first time since it acquired Blacks in 2012. A store refit programme has seen 20 out of 78 stores updated, which has “significantly improved” sales, chief executive Barry Bown said.
Group operating profit before exceptional items increased by 27.5% to £78.2m, up from £61.3m in 2013, thanks to an “exceptional” performance in its sport arm.
But the fashion arm was dragged down by underperformance from Bank reporting losses of £6.4m, compared with £1.7m last year.
Bown told Drapers this was not unexpected: “We always knew it was going to be tough and one of the only ways we could address that was trying something fresh, so we brought in a new managing director [for Bank, Gwynn Milligan] in August and are starting to see green shoots coming through.”
Changes include general “housekeeping” – such as addressing Bank’s “expensive” property portfolio, being “more disciplined” and introducing third-party brands, as revealed by Drapers last summer, which are expected to join the line up in autumn 14 or spring 15. Bown declined to go into specifics beyond saying they were “well established, recognised brands”.
He also declined to comment on whether or not JD may look to offload the business eventually, adding: “We are not looking at anything over than making sure tomorrow is better than today.”
Bown said JD, which makes up the bulk of revenues, was a major focus for the current year, particularly for European expansion, highlighting Spain, Holland, Germany and France as areas of growth. UK expansion across the fascias is also continuing.
Bown added that the business, which has most recently acquired Scottish business Tiso and took a stake in indie Mainline Menswear, was still open to the right opportunities where there are gaps in its portfolio.
“It’s fair to say various things come across our desk, some of which we are interested in pursuing and some not so much, but it’s on a case-by-case basis, depending on where we are in those markets,” he said.
“There probably are [some gaps], but we are careful not to overstretch outselves – we have to make sure the core of the business is fit and healthy.”