Retailer JJB Sports warned of a 20% profits shortfall today after poor weather drove down sales of its summer clothing ranges.
T-shirts, polo shirts and shorts were left hanging on the rails as a string of wet days meant the group was unable to build on strong demand for replica football kits during Euro 2004.
Wigan-based JJB Sports also said it was a victim of strong competition as like-for-like turnover fell 2% during the 29 weeks to 15 August. Last month JJB said same-store turnover had been 1.3% lower in the 23 weeks to 4 July 4.
In a trading statement today, JJB said “it no longer believes that the market expectations of its profits for the current financial year can be met”.
Analysts had expected the group to post net profits of £88m, but JJB said the figure for the year would be down 20% on those estimates.
The retailer, which has 448 stores across the country, vowed to press ahead with its store opening programme in spite of its trading woes.
In addition, JJB pledged to expand further into the market for combined health club and superstores, saying its cash flow remained strong.
Shares slumped 17% – down 37.75p to 179p – while rival JD Sports fell 8%.
Prior to today, shares in JJB were a third lower than at the start of April when the company reported a disappointing start to the year amid tough conditions in the clothing market.
Shares have more than halved in value since its £42.9m acquisition of discount chain TJ Hughes in April 2002. It traded poorly and was eventually sold 18 months later.
Retail analyst Rhys Williams, of stockbrokers Seymour Pierce, said the recent wet weather was likely to put a squeeze on sales of a number of clothing retailers on the high street.
But many retailers have a larger wholesale business than JJB Sports and this would help cushion the impact of weaker demand for summer clothing in their stores, he said.
JJB said openings in 2004 would involve 11 stand-alone superstores, seven combined health club and superstores and ten smaller Icon stores.
This strategy would have “a material and beneficial impact upon profits over the coming years”, JJB said today.
The group added that its final results for 2004 still hinged on trading over the key Christmas period.
References: EGi News 19/08/04
