27th Jul 2006 10:30
JJB Sports PLC27 July 2006 JJB Sports Plc ("JJB") AGM Trading Statement JJB is holding its Annual General Meeting today and is taking this opportunityto provide an update on its current trading and prospects. Current Trading Total Group revenue, including health clubs, for the 25 weeks to 23 July 2006was 11.6 per cent higher than the comparative period last year and included anincrease in like-for-like revenue, in respect of operating units which have beenopen for over 52 weeks, of 9.0 per cent. Revenue from the retail store chain increased by 9.8 per cent; over half of thisincrease came from replica kit products as a result of both the FIFA World Cupand from JJB's new Rangers FC licensing agreement. All other product categoriesrecorded increases in revenue when compared to the same period last year, with the exception of golf, an area that is currently being over supplied in the UK, and has resulted in price-cutting by many retailers. Revenue from JJB's health clubs has increased by 40.7 per cent. JJB currentlyoperates from 37 health clubs with 153, 800 members compared to 28 clubs with113, 000 members at this date last year, reflecting the continuing success ofthe clubs. The sports retail market is still particularly competitive and JJB has continuedto match the prices of its competitors. The blended gross margin for the first25 weeks of the current accounting period is 180 basis points lower than thatachieved in the same period last year. Included within this blended gross marginis a fall in the gross margin achieved by the retail store chain of 280 basispoints. The number of units of World Cup related product, sold by JJB during thecurrent accounting period, is very much in line with its expectations butpredatory pricing on England replica shirts by competitors resulted in ashortfall in the gross profit achieved on these shirts. This has been partlyoffset by an increase in gross profit from other product categories. Grossmargin comparatives will become easier to match after October following JJB'sdecision in October 2005 to adopt a more competitive pricing stance. Net operating expenses, before profits or losses on sales of property, plant andequipment, have increased by 8.4 per cent over the comparative period, beingprincipally affected by the additional number of combined health clubs/superstores in operation. Prospects JJB does not expect the competitive situation within the sports retail market toease, and had already factored the current situation into its expectations forthe Group's current year results. However, JJB now believes that with the helpof its "Serious about Sport" initiative, it is better placed to offer a moresports focused product range which further differentiates it from itscompetitors. The expansion of JJB's combined health clubs/superstores is continuing in linewith its plans. A total of 5 combined units have been opened during the 25 weeksto 23 July 2006 and a further 5 to 6 will be opened during the remainder of thisaccounting year. Plans are already well advanced for openings during the nextaccounting year with 12 sites already secured or in an advanced process ofnegotiation. Initial sales of Rangers FC products have been satisfactory, following JJB'sacquisition of the club's licensing rights on 8 June 2006. JJB's acquisition of the Golf TV Group will form the platform for a JJBtelevision shopping channel further extending JJB's geographically wide storecoverage. JJB has also recently created its online shopping facility, therevenue from which is comfortably matching expectations. JJB's chain of 22 small Icon stores, which retails fashion/leisure clothing andfootwear ranges which are not carried within the JJB stores, has been entirelyused as a means of generating some income from stores which had earlier beenvacated by JJB. The Board have recently made the decision to dispose of thechain. Commenting today, Roger Lane-Smith, Non-executive Chairman said:- "When I announced our preliminary results to January 2006 in April this year, Iindicated that I did not foresee any improvement in trading conditions in thecurrent financial year. We have in the year to date seen encouraging improvements in like-for-likesales, with increased sales of replica kit, albeit at the expense of margin,which has benefited our cash flow. Whilst our health club offering continues to prosper, competition within thesports retail market is still severe and as ever, the Christmas trading periodwill be an important constituent of our year-end results." For further information please contact: JJB Sports plc 01942 221400 Tom KnightDavid Greenwood Maitland: 0207 379 5151 Philip GawithCharlotte Barker This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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