Final Results
John David Group (The) PLC
01 May 2003
1st May 2003
THE JOHN DAVID GROUP PLC
PRELIMINARY RESULTS
FOR THE 10 MONTH PERIOD TO 31ST JANUARY 2003
The John David Group Plc ('the Group'), a leading specialist retailer of
fashionable branded sports and leisure wear, today announces its Preliminary
Results for the 10 month period ended 31st January 2003 ('the Period').
• Group turnover increased to £370.8 million (Year ended 31st March
2002: £245.6 million)
• Group operating profit (before goodwill and exceptional items) of
£18.0 million (Year ended 31st March 2002: £20.4 million)
• Profit before tax (before goodwill and exceptional items) of £15.1
million (Year ended 31st March 2002: £20.3 million)
• Final dividend of 3.64p maintaining annualised dividend at the same level
as last year (total dividend of 6.50p - Year ended 31st March 2002: 7.80p)
• Total sales in JD Sports increased by 10.4% against the same period
last year, including a like for like decline in sales of 0.5%
• Acquisition of the Sport and Fashion division of Blacks Leisure Group Plc
('First Sport') completed in May 2002 comprising 209 stores and
495,000 sq.ft. of retail space
• Over 60 First Sport stores now converted to JD Sports format and
recent trading encouraging
• During the last seven weeks like for like sales have increased by 1.9% in
JD Sports and the fall in like for like sales reduced to 0.8% in First Sport
John Wardle, Chairman, said: 'We now appear to be back on track to deliver
improving profitability for the Group following our sizeable acquisition in May
2002. The Board remains confident that the Group is now refocusing the business
to deliver long term growth and profitability'.
Enquiries:
The John David Group Plc Tel: 0161 767 1000
Barry Bown, Chief Executive
Malcolm Blackhurst, Finance Director
Hogarth Partnership Limited Tel: 020 7357 9477
Andrew Jaques
Tom Leatherbarrow
CHAIRMAN'S STATEMENT
Following continued good progress at the interim stage, our performance in the
second part of the trading period was disappointing. For the first time in the
company's history as a public company we suffered a dip in profits. As
previously reported, our trading performance was adversely affected in the
latter part of the trading period as systems were integrated and fragmented
stock lines continued to be cleared in the First Sport division.
The acquisition of the First Sport division has consolidated our position as the
leading sports fashion retailer in the UK and has significantly increased our
buying power. However we underestimated the time it would take to fully
integrate First Sport into our existing business, and while the major disruption
is over, there is still more work to be done.
Since the end of January 2003, following successful trials, we have converted
over 60 First Sport stores to the JD Sports format and I am pleased with the
overall results to date. The conversion programme will continue over the coming
months and will include some conversions to our Ath-leisure fascia. The Group's
trading performance has improved in the last seven weeks and we are hopeful that
this improvement will continue. The majority of stocks inherited from the
acquisition have now been sold and the new Spring/Summer stocks have generally
sold through well.
The current financial year ending 31st January 2004 will be a year of continuing
consolidation as we shape the Group for long-term growth.
I have asked Roger Best to become Executive Chairman and I am pleased to
announce his appointment to the position with immediate effect. Roger has been
Non-Executive Deputy Chairman since January 2002 and I believe he has the right
experience and skills to lead the business to success over the coming years. I
will be staying actively involved on the Board as Executive Deputy Chairman.
RESULTS
Total sales increased to £370.8 million during the period in comparison with
£245.6 million for the year ended 31st March 2002. £134.9 million relates to
First Sport. Total sales in JD Sports increased by 10.4% against the same period
last year, including an underlying like for like sales decline of 0.5%. Total
sales in the First Sport division from the date of acquisition decreased by 5.8%
with a like for like sales decline of 5.3%. Gross margin was slightly reduced in
JD Sports by 0.1% to 46.9% (year ended 31st March 2002: 47.0%); gross margin
performance in the First Sport division was 42.9%. Gross margin in the First
Sport division has necessarily been at a lower level in order to facilitate the
clearance of fragmented stock lines and should continue to improve in future
periods.
Operating profit before exceptional items and amortisation of goodwill was £18.0
million for the Period and after interest charges was £15.1 million (year ended
31st March 2002: £20.4 million and £20.3 million after interest charges).
After charging exceptional items of £3.5 million and goodwill amortisation of
£0.4 million, operating profit before interest charges and loss on disposal of
fixed assets was £14.1 million for the Period (year ended 31st March 2002: £20.4
million).
Net profit before tax and after exceptional items and goodwill amortisation was
£10.78 million for the Period (year to 31st March 2002: £20.07 million).
Net interest charges increased to £2.9 million compared with £0.2 million due to
the additional debt taken on to fund our recent acquisition. Earnings per share,
before exceptional items and goodwill, were 21.18p compared with 29.61p in the
previous year; 4.02p of this downturn relating to the full interest burden of
the acquisition (prior to integration of the acquired business).
DIVIDEND
The Board proposes to pay a final dividend of 3.64p per ordinary share (year
ended 31st March 2002: 5.20p). The total dividend for the 10 month period of
6.50p is therefore maintained at the same level as last year on a pro-rata basis
(year ended 31st March 2002: 7.80p). The proposed final dividend will be paid on
22nd August 2003 to shareholders on the register as at 25th July 2003.
OPERATING REVIEW
The overall result for the Period was adversely affected by the initial
integration of the First Sport division at the end of September 2002 and by
fragmented stock lines prevalent within this division. The fragmented stock
lines necessitated sales at a lower gross margin than would normally be expected
which featured throughout the majority of the period.
The period of integration of around 10 to 11 weeks from the end of September
2002 affected both the trade in First Sport and, to a lesser extent, JD Sports.
Fragmented stock lines also hampered our progress in the First Sport division
and management time was also diluted to some extent as we continued to absorb
and revitalise the First Sport chain. The addition of First Sport in May 2002
was a major event which almost doubled our retail trading space and added a
further 209 stores to our existing chain of 166 stores.
Our expansion also continued during the Period, opening 24 new stores,
relocating two smaller stores and closing 10 further stores, adding a net
119,000 sq.ft. of retail space. At the end of January 2003, therefore, the Group
traded from 385 stores occupying a total of 1,264,000 retail sq.ft. This total
includes 28 out of town / edge of town stores which occupy 196,000 retail sq.ft.
We continue to be highly selective in relation to new stores, which are assessed
on demanding criteria. The performance of existing stores is also reviewed on a
regular basis.
The Group has continued with its strategy of providing main brand fashionable
product, supported by a great number of lines available exclusively at JD
Sports; branded product is further enhanced by an innovative and exclusive mix
of own brand merchandise. During this Period, First Sport did not benefit to any
great extent from the type of product we would normally have on offer to our
consumer. The First Sport chain has generally been repositioned during the
Period and a number of its original stock lines now discontinued. In-store
merchandising and higher levels of retail disciplines have also been introduced
and enhanced and conversions to JD format have been tried and tested in a number
of locations.
Our product mix is broadly 50% footwear, 46% clothing and 4% accessories for the
Period as a whole; this mix is broadly consistent with the previous year. Given
our focus on fashion-led sports and leisure wear, replica kit represents a
minimal part of our total turnover.
Shop fascias under which the Group currently trades include JD, First Sport,
Athleisure, Size? and Open. Our in-store formats of JD Casual, JD Woman, JD
Junior, JD Limited Edition and King of Trainers have continued and marketing
campaigns have also remained consistent with these formats. Marketing of First
Sport has been at a fairly low level during this period as stock packages were
being brought up to the required standard. An increasing number of the First
Sport stores will benefit from marketing under the JD banner, following
conversion. We continue to strive to provide a unique store ambience and high
standards of display, which in turn complement the desirable and innovative
branded sports and leisurewear we have to offer. These desired features seek to
ensure a varied and pleasurable shopping experience to our brand conscious
consumers.
BALANCE SHEET & FINANCIAL RESOURCES
Shareholders' funds at the balance sheet date have increased by 6.7% to £58.8
million from the previous level of £55.0 million at the end of March 2002.
Total expenditure on fixed assets during the period amounted to £18.2 million of
which £16.3 million relates to stores. Net borrowings at the end of January 2003
were £55.5 million. A reduction in gearing is presently expected by the end of
January 2004 and £6 million of our core borrowings are planned to be repaid
during the year. Gearing should fall following reduced capital expenditure and
improving retained earnings in the year to 31st January 2004. Interest cover is
presently in the region of six times.
Stock levels at the end of the period are in line with expectations at £69.2
million and lower than last year's combined levels of £70.4 million as stocks in
the First Sport division were traded through and cleansed throughout the period.
JD SPORTS DIVISION
Total sales for the Period in JD Sports increased by 10.4% including an
underlying decline in like for like sales performance of 0.5%. Gross margin for
the period was slightly reduced by 0.1% to 46.9% in comparison with 47.0% in the
previous year. Stock levels are in line with forecast at the period end.
Expansion continued during the period, opening 21 new stores and closing four
smaller stores including one relocation, adding a net 122,000 sq. ft. of retail
space. At the end of January 2003, therefore, the JD Sports format traded from
181 stores, including Athleisure, Open and Size?, occupying a total of 772,000
retail sq. ft. This total includes 28 out of town / edge of town stores which
occupy 196,000 retail sq. ft.
Exclusive branded merchandise continues to be complemented by our Mckenzie and
Carbrini labels and product differentiation has been maintained via exclusive
lines which are further enhanced by our own in house design capabilities.
Product mix for the period has remained fairly consistent being broadly 50%
footwear, 46% clothing and 4% accessories.
Since the end of January 2003, no additional stores have opened and one small
store has been relocated. Total retail space in this chain is currently 770,000
retail sq. ft. trading from 180 stores. In the current year to 31st January
2004, we presently plan to open five to seven stores increasing our retail
selling space by approximately 7% to 10% in this division; one store is expected
to open before the end of July 2003 with the balance opening in the second half
of the year.
FIRST SPORT DIVISION
Total sales for the period since acquisition in the First Sport division
decreased by 5.8% including a like for like sales decline of 5.3%. Gross margin
achieved of 42.9% was at a lower level than JD Sports in order to clear
fragmented stock lines. Margin performance in this division should continue to
improve in future periods.
Since the acquisition, three new stores have been opened and eight stores have
now been closed including one relocation. At the end of January 2003, therefore,
the First Sport division traded from 204 stores occupying a total of 492,000
retail sq. ft.
Since the end of January 2003, no additional stores have opened and five small
stores have closed. Total retail space in this chain is therefore currently
478,000 retail sq. ft. trading from 199 stores. The store portfolio continues to
be under review as sales densities increase towards their expected future
levels; no new stores are currently planned in this chain for the year to 31st
January 2004.
Since the Period end, following successful trials, we have converted over 60
First Sport stores to the JD Sports format. The conversion programme will
continue in the coming months and will also include some conversions to our
Athleisure fascia.
BOARD APPOINTMENTS
We are delighted to announce the appointment of Roger Best to the Board as
Executive Chairman of the Group. Roger has served as Non-Executive Deputy
Chairman since January 2002. Roger previously spent 10 years with Reebok
International - initially as Managing Director of Reebok UK, progressing to
Senior Vice President of Europe, Africa and the Middle East. He has a great deal
of experience in the sports and leisure wear sector which will be invaluable to
the Group going forward. John Wardle will remain actively involved on the Board
as Executive Deputy Chairman.
We are also pleased to announce that Chris Bird will be joining the Board as a
Non-Executive Director with immediate effect. Chris is a marketing services
specialist who runs his own successful Manchester based consultancy. There are
no additional matters to be disclosed pursuant to paragraphs 6.F.2 (b) to (g) of
the Listing Rules.
The Board is actively seeking to recruit an additional non-executive director in
the near future.
CURRENT TRADING
We previously reported that trade in the key Christmas and January sales periods
had been disappointing and also that our gross margins during this period had
been below expected levels. February also showed a continuation of the poor
trading pattern experienced over Christmas and in January.
However, sales performance has improved recently following intake of new Spring
and Summer product. In the last seven weeks, total sales in JD Sports are up
13.0% and like for like sales up 1.9%. In First Sport, the decline in like for
like sales has now reduced to 0.8%. This is in contrast to a like for like sales
decline in the first five weeks of the current financial year of 0.8% in JD
Sports and 23.8% in First Sport. Total sales in JD Sports are up 12.3% in the
first 12 weeks of the current financial year and down 12.8% in First Sport
during the same period.
Gross margin performance has resumed to normal levels in JD Sports and gross
margin in First Sport is continuing to improve following an influx of new
product and as store conversions are completed. Stock levels continue to remain
in line with plan.
During the first 12 weeks of the financial year, over 60 stores have been
converted from the First Sport format into the JD Sports format and this,
together with improved product, has greatly assisted the First Sport recovery in
weeks 6 to 12. Since conversions began in the second week of the financial year,
the underlying like for like sales performance from these stores has exceeded
the base performance by over 7%, on average.
Further conversions are presently in progress but we are proceeding cautiously
and monitoring results from the various regions and locations as certain stores
are completed. We are able to complete several store conversions per week - as
demonstrated to date - and therefore would complete at least 150 stores within
the next twelve months, if we were to continue at a similar rate.
Since 31st January 2003, no further stores have been opened, five smaller stores
have closed and one has been relocated. Group retail space now totals 1,248,000
sq.ft. and total number of stores 379. We presently envisage that a further five
to seven stores will open during the year to 31st January 2004 increasing retail
selling space of the Group by approximately 4% to 5%. One store is expected to
open before the end of July 2003 with the balance opening in the second half of
the year.
PROSPECTS
We are now well on track to achieving the objectives of cleansing inherited
stocks and implementing a clear strategy in relation to all stores within the
First Sport division.
As noted, we have now successfully converted over 60 First Sport stores into JD
Sports format and are encouraged by their performance to date. We also have the
ability to accelerate this process during the year, converting stores into
either JD Sports or Athleisure formats depending on locality and proximity to
existing JD Sports stores. Stores can be converted at the rate of several per
week and at modest cost. This strategy will improve the presence of the JD
Sports format on the high street significantly and in a number of locations
where there is no current JD Sports representation. As previously reported, the
First Sport chain originally existed in approximately 100 locations throughout
the U.K. where there was no JD presence.
The Group will therefore have a much clearer focus in the future and a greater
opportunity to benefit from expected synergies. Under the JD Sports banner there
will be a greatly increased scale of buying power together with improved
management focus and product direction.
As far as the current JD Sports format is concerned, there still remains a
significant expansion opportunity and a number of sites have been identified for
future expansion. JD Sports has the ability to trade from high street or out of
town and edge of town areas and from large or small levels of retail space.
Recent additions have tended to be of 5,000 to 7,000 sq.ft. on average and
therefore retail space can be quickly increased via the JD Sports chain when
desired. There will also be further expansion opportunities via our 'Athleisure'
and 'Open' formats.
For the current financial year to 31st January 2004, we have decided to reduce
our level of expansion below the expected level and new stores will
predominantly open in the second half of the year. Five to seven stores have
presently been identified increasing total retail space by 4% to 5% by the end
of the year. With a lower level of expansion this year, this will enable us to
complete all conversions and strive to the increased sales densities we require
from the First Sport division. We currently envisage that previous levels of
expansion in excess of 15 stores per year will then continue to progress in the
year to 31st January 2005. Controlled expansion of the JD Sports chain will then
continue on an annual basis.
I continue to remain confident of our success in the future and excited by the
long term prospects for the Group.
John Wardle
Chairman
1st May 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the 10 month period ended 31 January 2003
Note 10 months to 10 months to 10 months to 12 months to
31 January 31 January 31 January 31 March
2003 2003 2003 2002
existing continuing Continuing
operations acquisitions operations Operations
£000 £000 £000 £000
Turnover 235,934 134,870 370,804 245,621
Cost of sales (125,195) (77,034) (202,229) (130,144)
_______ _______ _______ _______
Gross profit 110,739 57,836 168,575 115,477
Distribution costs - normal (85,308) (55,837) (141,145) (88,346)
Distribution costs - (400) (2,533) (2,933) -
exceptional
Administrative expenses - (6,275) (3,892) (10,167) (6,759)
normal
Administrative expenses - (400) (181) (581) -
exceptional
Other operating income 199 134 333 67
_______ _______ _______ _______
Operating profit/(loss) 18,555 (4,473) 14,082 20,439
Before exceptional items and 19,355 (1,338) 18,017 20,439
goodwill amortisation
Exceptional items 1 (800) (2,714) (3,514) -
Goodwill 1 - (421) (421) -
Operating profit/(loss) 18,555 (4,473) 14,082 20,439
Loss on disposal of fixed (433) (187)
assets
_______ _______
Profits on ordinary activities 13,649 20,252
before interest
Interest receivable and similar 212 104
income
Interest payable and similar (3,080) (283)
charges
_______ _______
Profit on ordinary activities 10,781 20,073
before taxation
Taxation on profit on ordinary (4,024) (6,235)
activities
_______ _______
Profit on ordinary activities 6,757 13,838
after taxation
Dividends paid and proposed (3,038) (3,646)
_______ _______
Retained profit 3,719 10,192
_______ _______
Earnings per ordinary share: 2
- Basic 14.46p 29.61p
- Adjusted to exclude 21.18p 29.61p
exceptional items and goodwill
amortisation
- Diluted 14.45p 29.60p
The group has no recognised gains or losses other than the results reported
above.
The results above also represent the historic cost profit.
CONSOLIDATED BALANCE SHEET
As at 31 January 2003
31 January 31 March
2003 2002
£000 £000
Fixed assets
Intangible assets 11,643 -
Tangible assets 74,292 40,033
_______ _______
85,935 40,033
_______ _______
Current assets
Stocks 69,171 36,472
Debtors and prepayments 13,632 6,574
Cash at bank and in hand 3,527 986
_______ _______
86,330 44,032
Creditors: amounts falling due within one year (53,157) (22,880)
_______ _______
Net current assets 33,173 21,152
_______ _______
Total assets less current liabilities 119,108 61,185
Creditors: amounts falling due after more than one year (56,294) (3,134)
Provisions for liabilities and charges (4,050) (3,016)
_______ _______
Net assets 58,764 55,035
_______ _______
Capital and reserves
Called up share capital 2,338 2,337
Share premium account 8,917 8,908
Profit and loss account 47,509 43,790
_______ _______
Equity shareholders' funds 58,764 55,035
_______ _______
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
As at 31 January 2003
31 January 31 March
2003 2002
£000 £000
Profit for the period 6,757 13,838
Dividends paid and proposed (3,038) (3,646)
_______ _______
Retained profit for the period 3,719 10,192
Proceeds from issue of ordinary shares 10 -
_______ _______
Net movement in equity shareholders' funds 3,729 10,192
Opening equity shareholders' funds 55,035 44,843
_______ _______
Closing equity shareholders' funds 58,764 55,035
_______ _______
CONSOLIDATED CASH FLOW STATEMENT
for the 10 month period ended 31 January 2003
10 months to 12 months to
31 January 31 March
2003 2002
£000 £000
Net cash inflow from operating activities 28,194 21,460
Returns on investments and servicing of finance (2,734) (179)
Taxation (5,957) (5,324)
Capital expenditure (18,005) (11,816)
Acquisitions (52,201) -
Equity dividends paid (2,431) (3,365)
_______ _______
Net cash (outflow)/inflow before financing (53,134) 776
Financing 55,675 (659)
_______ _______
Increase in cash 2,541 117
_______ _______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the 10 month period ended 31 January 2003
10 months to 12 months to
31 January 31 March
2003 2002
£000 £000
Increase in cash in the period 2,541 117
Cash (outflow)/inflow from movement in debt and (55,665) 659
lease financing
Movement in net debt in the period (53,124) 776
Net debt at start of period (2,349) (3,125)
Net debt at end of period (55,473) (2,349)
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
for the 10 month period ended 31 January 2003
10 months to 12 months to
31 January 31 March
2003 2002
£000 £000
Operating profit 14,082 20,439
Depreciation charge 7,907 6,000
Amortisation of goodwill 421 -
Decrease/(increase) in stocks 227 (6,369)
Increase in debtors (1,230) (1,031)
Increase in creditors 6,787 2,421
Net cash inflow from operating activities 28,194 21,460
All exceptional items shown within operating profit have resulted in cash flows
in the period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 Operating profit and exceptional items
Operating profit is stated after charging goodwill amortisation of £421,000
relating to the acquisition of the First Sport division.
Exceptional items comprise mainly expenditure directly relating to the
acquisition and integration of the First Sport division of Blacks Leisure Group
Plc, acquired in May 2002.
2 Earnings per ordinary share
Basic earnings per ordinary share represents the profit for the period of
£6,757,000 (2002: £13,838,000) divided by the weighted average number of
ordinary shares in issue of 46,743,692 (2002: 46,740,477).
Adjusted basic earnings per ordinary share have been based on the profit on
ordinary activities after taxation for each financial period but excluding
exceptional items and goodwill amortisation.
The diluted earnings per share is based on 46,747,348 (2002: 46,749,756)
ordinary shares, the difference to the basic calculation representing the
additional shares that would be issued on the conversion of all the dilutive
potential ordinary shares. There is no material difference to earnings if all
the dilutive potential ordinary shares are converted.
The earnings used to calculate earnings per ordinary share is given below:
Earnings attributable to ordinary shareholders As at 31 January As at 31 March
2003 2002
£000 £000
Profit on ordinary activities after taxation 6,757 13,838
- Exceptional items 3,514 -
- Tax relating to exceptional items (791) -
- Goodwill amortisation 421 -
_______ _______
Profit after taxation excluding exceptional items 9,901 13,838
and goodwill amortisation
_______ _______
Adjusted basic earnings per ordinary share 21.18p 29.61p
_______ _______
Effect of net interest payable (net of taxation) 4.29p 0.27p
_______ _______
25.47p 29.88p
_______ _______
3 Acquisition of the First Sport division from Blacks Leisure Group Plc
The group purchased four companies comprising the First Sport division of Blacks
Leisure Group Plc on 21 May 2002 for a total consideration of £55.4 million,
comprising £42.4 million for net assets, £0.9 million loan finance costs and
£12.1 million for goodwill. The acquisition was funded by a new bank facility,
being a five year term loan of £40 million together with a revolving credit
facility of £40 million, over the same period.
4 Accounts
These figures are abridged versions of the Group's full accounts for the 10
month period ended 31 January 2003 and do not constitute the Group's statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
Group's auditors have audited the statutory accounts for the Group and have
issued an unqualified audit opinion thereon within the meaning of Section 235 of
the Companies Act 1985 and have not made any statement under Section 237 (2) or
(3) of the Companies Act 1985 for the 10 month period ended 31 January 2003.
Statutory accounts for the year ended 31 March 2002 have been delivered to the
Registrar of Companies. Statutory accounts for the 10 month period ended 31
January 2003 will be delivered to the Registrar of Companies following the
Annual General Meeting.
Copies of the full accounts will be sent to shareholders in due course.
Additional copies will be available from The John David Group Plc, Hollinsbrook
Way, Pilsworth, Bury, Lancashire, BL9 8RR.
This information is provided by RNS
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