Analysts have not been put off by the major drop in pre-tax profits reported by JD Sports Fashion this morning, noting the long term strategy at play.
Pre-tax profits fell 85% from £20.07m to £2.88m in the 26 weeks to July 28 as a result of a £10m from recent acquisition Blacks.
But Investec analyst David Jeary was positive about the latest results, saying this figure was actually better than he had predicted.
The reason for this that sports fascias were holding up better than expected, Jeary said, adding that the future for Blacks “bodes well” with management expecting the outdoor retailer to edge closer to breaking even in the second half of the year.
“While we may fine-tune the balance of divisional numbers, we are leaving our full year 2013 profit before tax forecast of £65m unchanged at this stage,” he said. “While much remains to do at Blacks, we see outer year risk now weighted to the upside.”
Independent analyst Nick Bubb said today’s update was “much as expected”, despite dubbing the profits drop “an ugly slump”.
“Most of that reflects the disastrous Blacks £10m loss and other business acquisitions (£1.7m loss), although the core business EBIT was down by 8%,” he added.