JD flags cost of Blacks rescue
JD Sports has warned the Blacks Leisure business it rescued from administration will cost it up to £15 million in this financial year.The sports and fashion retailer said Blacks, which it bought for £20 million in January, could suffer £10 million operating losses and up to £5 million of restructuring charges as it bids to revive the business.
While it believes Blacks can return to profit in the medium term, Seymour Pierce retail analyst Freddie George warned this is unlikely until 2015 at the earliest.
JD, which has already closed 81 of the worst performing Blacks stores as it looks to eliminate a high rent bill, said its immediate priority was to "significantly improve" the appeal of the chain to customers.
The update on Blacks came as JD, which operates about 355 JD Sports and Size? outlets in the UK, said trading had improved slightly in recent weeks but warned margins were under pressure amid fierce discounting.
Like-for-like sales were up 1.5% in the 19 weeks to June 9, which represents a rise of around 1.8% over the past 10 weeks and comes despite poor weather.
The Bury-based group said its fashion-based stores - Bank and Scotts - saw a 3% lift in underlying sales over the 19 week period, outperforming its sports stores, which were up 1.2%.
Shares in JD Sports were nearly 2% higher in early trading.
Mr George expects that JD's first half results in September will be "markedly down" against the previous year but that full-year profits will still be around £68 million, down from £74.8 million a year earlier.
He said: "We now believe the integration and return to profitability of Blacks will take longer than expected and we now do not expect Blacks will break even until the full-year to 2015 at the earliest."
Like-for-like sales were up 1.5% in the 19 weeks to June 9, which represents a rise of around 1.8% over the past 10 weeks and comes despite poor weather.
The Bury-based group said its fashion-based stores - Bank and Scotts - saw a 3% lift in underlying sales over the 19 week period, outperforming its sports stores, which were up 1.2%.
Shares in JD Sports were nearly 2% higher in early trading.
Mr George expects that JD's first half results in September will be "markedly down" against the previous year but that full-year profits will still be around £68 million, down from £74.8 million a year earlier.
He said: "We now believe the integration and return to profitability of Blacks will take longer than expected and we now do not expect Blacks will break even until the full-year to 2015 at the earliest."
© 2013 Press Association