JD announced a fall in profits yesterday after Blacks contributed a £2.2m loss in just three weeks of JD’s ownership.
Following its £20m acquisition of Blacks in January, JD said it found the chain in a “very fractured” state with a severe lack of stock in key lines and a bloated cost base.
It has closed 81 of the worst performing stores, leaving it with a chain of 215 stores.
JD’s executive chairman Peter Cowgill said the ultimate size of the chain would depend on each store’s performance, rents and property costs.
So far the cost of the restructuring and redundancies is £3.5m, but Mr Cowgill anticipates a further charge for restructuring costs in the year to January 2013.
He said there are no plans to turn Blacks into a more fashionable brand.
“There will be no loud music blasting at you. We will stay true to the core values of Blacks,” said Mr Cowgill.
The core JD operations have continued to perform well, but the impact of recent acquisitions meant bottom-line profits fell 14 per cent to £67.4m.
JD said Blacks would continue to drag on earnings in the current financial year, rather than the neutral impact expected in January.
“It is clear that the recently acquired Blacks business will be dilutive to earnings this year whilst we resolve the challenges across the business, particularly with regards to stock and property,” said Mr Cowgill.
JD bought the stores, which trade under the Blacks and Millets names, and the bulk of the rest of the business immediately after Blacks Leisure was put into administration.
JD reported a “satisfactory” first nine weeks of the new financial year, with one per cent like-for-like sales growth at its sports stores and 2.3 per cent for its fashion division, which includes the brands Bank and Scotts.
The group’s finance director Brian Small said: “We had a very good period of trading in December, around Christmas, but January and February were a bit tougher.
“Since then there have been signs of life on the high street.”
Mr Cowgill said that while he expected some improvement in consumer confidence from the London Olympics and the Uefa finals, any gains would probably be lost because some stores would be hit by transport disruption or lack of access during the Olympic Games.
Operating profits from the sports stores increased by £1m to £74.3m in the year to January 28, while the fashion arm declined by £2.1m to £3.1m due to the loss of two key brands.
The Bank fascia has 80 stores predominately based in the North and the Midlands, while there are 35 Scotts stores and a further six Cecil Gee outlets following their acquisition from Moss Bros.
JD, which sells merchandise from top brands like Nike and Adidas, said revenues for the year surged 20 per cent to £1.06bn.
Analyst David Jeary at Investec said: “JD’s results have once again reflected its conservative under-promise and over-deliver approach, beating our, and consensus, forecasts by some £4m.
“This is despite the inclusion of a £2.2m trading loss for the three-week stub period of the Blacks Leisure acquisition, albeit benefiting from a better than expected trading result from the Spanish Sprinter chain, which excluded the (unquantified) loss-making opening period of the year.”
JD has 20 stores in Yorkshire, including York, Rotherham, Scarborough, Castleford, Leeds, Bradford, Keighley, Sheffield and Hull.
Blacks has six Yorkshire stores, which include Leeds, Harrogate, York, Sheffield and Hull.
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