JD Sports today said the costs of multichannel development were among factors that look set to deliver a large dent to its financial results in the first half of the year.
In a management statement the sports equipment and fashion retailer reported like-for-like sales growth of 1.5% in the 19 weeks to June 9 but warned its “core retail results” would be hit in the first half of its financial year by pressure on margins in an “offer-driven market,” as well as overheads related to multichannel development, international retail, brands and licensing.
A major part of the damage is likely to come from Blacks , the multichannel outdoor retailer it bought out of administration at the end of January. The Blacks group, which also includes Millets, delivered an operating loss of £2.2m in the first three weeks of its ownership thanks to lack of stock and an “excessively large and over rented store portfolio,” JD Sports said today.
It added: “The anticipated level of the operating loss in the Blacks business in the current year is £10 million with the potential for a further up to £5 million charge for restructuring.” Most of those losses are set to fall in the first half and the company said it was looking to restructure its store portfolio and improve the customer experience, with a view to reshaping it into a profitable business in the medium-term.