Profits at JD Sports Fashion have been hit by its acquisition of outdoor retailer Blacks, despite seeing growth in sales.
Profit before tax fell 85% from £20.07m to £2.88m in the 26 weeks to July 28, largely as a result of a £10m loss at Blacks. Like-for-like operating profit also fell, but by a relatively smaller 8.2% to £14.92m.
The retail group has previously warned that it expected an initial loss as a result of “a critical lack of stock and unsustainable cost base”.
The relocation of its warehouse and the phasing of sales from other recent acquisitions Tessuti and Originals also contributed to the loss.
But sales told a different story, with revenues rising 26.4% to £555.99m. Like-for-like sales in the UK and Ireland rose by 1.1%.
JD’s sports fascias, including JD, Size?, Chausport, Sprinter and Champion Sports, saw like-for-like sales rise 1.2%. Fashion fascias, including Bank, Cecil Gee and Scotts, grew 0.7%.
Executive chairman Peter Cowgill said the losses were broadly as expected, noting that the one-off series of investments “provide the group with a very positive platform for future development”.
Overseas expansion, such as the store openings in France and Spain, presented “long term value for our shareholders”.
Cowgill added: “The robust trading in the sports fascias has continued since the period end although trading in the fashion fascias has been more difficult. Our outdoor business continues to stabilise and aims to break even in the second half before any restructuring charges.”
The group is now expected to deliver growth within expectactions for the full year, which runs until February 2.