£700,000 JD stock looted in riots

RETAILER JD Sports Fashion today revealed that £700,000 of stock was looted in last month’s riots while one of its stores has yet to reopen after suffering fire damage.

A total of 16 stores in London, Nottingham, Manchester and Birmingham were hit by the disorder, with six in London suffering “very significant thefts”.

Its losses would have been worse if not for the pre-emptive measures it took to stop looters gaining access to its stores, it said.

Sign up to our Business newsletter

Sign up to our Business newsletter

A JD store in Woolwich in London is still closed as fire damage is repaired but the rest of the stores were reopened by Sunday August 21.

Despite the effect of the riots and store closures, the chain said like-for-like sales excluding VAT increased by 1.6% in seven weeks to September 17, underscoring its credentials as one of the top performing retailers.

However, it also revealed that underlying pre-tax profits declined 17% to £16 million in the half year to July 30 as its margins were squeezed by the impact of faltering consumer confidence and the increase in VAT.

The group said its performance was “excellent” given the ongoing pressure on profit margins from rising costs.

The chain’s core customers are teenagers and young adults, who are being particularly hard hit by the economic downturn and rising unemployment.

It has previously warned that it would struggle to pass on cost hikes as its customers see disposable incomes come under pressure.

Profit margins at its fashion division, which includes its 79 Bank and 37 Scotts stores and are mainly located in the North and the Midlands, came under pressure amid fierce competition on the high street.

The fashion division’s like-for-like sales increased by 5% in the half-year but its operating losses increased by £1.4 million to £3.4 million as a result of the reduced margin and investment in new stores.

Its sports division, which runs 357 JD Sports and Size? outlets, saw a 1% improvement in sales, but its gross margin increased slightly in the period.

Overall like-for-like sales excluding VAT declined 0.9% in the half-year, which marks an improvement on the 2.8% fall in the first 18 weeks of that period. They have returned to positive territory since.

Overall revenues increased 15% to £439.8 million in the period.

Executive chairman Peter Cowgill said the group was on track to meet the City’s expectations for the full-year although he expects trading conditions to remain tough.

Bottom-line pre-tax profits increased 21% to £20.1 million after being boosted by exceptional items from a joint-venture. It increased its dividend by 8% to 4.1p. Shares were up 3% in early trading.

The group said it was in discussions with insurers about a claim relating to the riots, adding it did not believe the events would affect its full-year performance.