John David Sports - Interim Results
21 January 1998 - 6:30PM
UK Regulatory
RNS No 9218k
JOHN DAVID SPORTS PLC
21st January 1998
JOHN DAVID SPORTS PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 1997
John David Sports Plc, a leading specialist retailer of fashionable branded
sports and leisure wear today announces its results for the six month period
ended 30 September 1997.
Highlights:-
* Turnover increased by 25.4% to #52.8 million (1996: #42.1 million).
* 14 stores opened and one closed bringing the chain to 91 stores
nationwide at the period end.
* Like for like sales decreased by 8% against extremely strong
comparatives.
* Profit before tax increased 10.4% to #5.52 million compared with #5
million in 1996 (pre exceptional).
* Earnings per ordinary share up 5.3% to 8.19p (1996: 7.78p).
* Store opening programme continued at anticipated rate.
Commenting on the outlook, John Wardle, Chairman, said: "The Company will
benefit from the much improved merchandising and buying controls now in place
and a more focused product offering. I envisage that the material benefits of
this will be gained in the autumn/winter of 1998. We have also greatly
improved the operating effectiveness of the business over the last six months.
To underpin these changes, a number of additional appointments have been made.
The secondary stock problem has now been dealt with and the strengthened
management team is now fully focused on exploiting the Company's position as
the UK's leading fashion sports retailer."
Enquiries: John Wardle (Chairman)/Peter Cowgill (Finance Director)
John David Sports Plc
Telephone: 0171 796 4133 (Hudson Sandler) on 21 January 1998 -
01706 628000 (thereafter)
Andrew Hayes
Hudson Sandler Limited
Telephone: 0171 796 4133
CHAIRMAN'S STATEMENT
Introduction
In my statement accompanying the announcement of the 1997 Preliminary Results
last June, I stated that there was a requirement from Spring 1997 to trade out
a number of slow moving stock lines. This stock disposal programme has taken
place throughout the current financial year and the current stock position is
now much improved. However, as forecast, this action has acted as a brake on
sales and margins over this period and led to some temporary increases in
operating expenses.
Following the stock issues experienced last year, and the associated
performance, management reviewed all aspects of the business. This concluded
that our core range had become too fragmented and not sufficiently fashion
focused. In response to this we have now completed the strengthening of our
merchandising, buying and marketing functions to address this. I am confident
that the combination of the stock clearance programme and these measures will
contribute to an improved future sales performance.
Results
Despite the impact of these stock issues during the six months to 30th
September 1997, total turnover for the six months to 30 September 1997 period
rose by 25.4% from #42.1 million to #52.8 million with pre-tax profits rising
by 10.4% to #5.52 million (1996: #5.0 million prior to exceptional charges.
Earnings per share rose by 5.3% to 8.19p (1996: 7.78p).
The like for like sales decrease of approximately 8% over the period resulted
from the poor stock offering, and the associated clearance programme during
the period together with the fact that the sales were against extremely strong
comparatives. As anticipated, the reduction in operating margin was a
reflection of the clearance programme together with a lower return from new
stores during their early period of trading. This has specifically arisen
from the write off of pre-opening store wages, hardening of rents and the
lower turnover/rent ratio during the early operating periods of new stores.
The considerable majority of new stores are achieving expectations.
The net profit before tax amounted to #5.52 million (1996: #5.0 million).
This reflects an increase in net profitability of 10.4% which has been
achieved despite a relatively disappointing trading period. Adjusted earnings
per share have increased from 7.78p to 8.19p.
Dividend
The Board proposes to pay an interim dividend of 2p per share (1996 : Nil)
which will be paid on 4 March 1998 to shareholders on the register at the
close of business on 6 February 1998.
Trading review
A key objective during the period was to trade out the slow moving stock
highlighted at the time of our 1997 Preliminary Results. The approach was to
trade this out in a planned programme so as to control the impact on sales and
margins. Management reviewed all areas of the business in light of this
issue. This concluded that our core range had become too fragmented and not
sufficiently fashion focused. In response to this we have now completed the
strengthening of our merchandise, buying and marketing functions to address
this. In particular, a number of key appointments have been made in these
areas and procedures and disciplines have been considerably strengthened. We
are confident that the business is now equipped to successfully address the
poor sales performance. Priority was also given to initiatives to improve
operating efficiency throughout the business particularly in wages and central
overhead efficiencies. Progress has been made in these areas.
During the period the Company progressed with its planned store expansion
programme. New store openings amounted to 14 in total with one store closure.
The store openings comprised three out of town/edge of town stores, one JD
footwear store and 10 JD Sports stores. The total number of stores in
operation at the period end was 91 of which 78 were JD Sports stores, 6 were
Athleisure stores, 4 were JD footwear stores and 3 were out of town stores. I
am particularly pleased to report that our out of town format has been well
received. In total the Company operated from 214,000 sq.ft. of retail space
at the period end.
Capital expenditure for the period amounted to #4.0 million. Of this, #3.7
million related to store development.
Balance sheet and financial resources
Shareholders' funds as at the balance sheet date increased to #24.9 million
including a retained profit of #2.9 million for the period. Gross cash
amounted to #6.7 million against structured borrowings of #6.4 million.
Current trading
Since the period end, total sales are 20% ahead of the previous year
reflecting the larger number of stores in operation. However, Christmas
trading was disappointing. As a result, there has been a continued decline in
like for like sales since the period end. Margins continue to be
depressed as the autumn/winter element of the slow moving stock has been
addressed. However, the current stock position is now much healthier and the
Company is in a position to benefit from this during the next financial year.
Outlook
The Company will benefit from the much improved merchandising and buying
controls now in place and a more focused product offering. I envisage that
the material benefits of this will be gained in the autumn/winter of 1998. We
have also greatly improved the operating effectiveness of the business over
the last six months. To underpin these changes, a number of additional
appointments have been made. The secondary stock problem has now been dealt
with and the strengthened management team is now fully focused on exploiting
the Company's position as the UK's leading fashion sports retailer.
John Wardle
Chairman
21 January 1998
John David Sports Plc
Interim results for the 6 months ended 30 September 1997
Profit and loss account
Note Unaudited Unaudited Audited
first half first half year ended
1997 1996 31 March
1997
#000 #000 #000
Turnover - continuing operations 52,804 42,093 88,067
Cost of sales
- ongoing (29,083) (23,268) (48,534)
- exceptional 2 0 (200) (200)
--------- ---------- ---------
Gross profit 23,721 18,625 39,333
Other operating expenses (net) (18,135) (13,630) (29,716)
--------- --------- --------
Operating profit - continuing
operations 5,586 4,995 9,617
Loss on sale of tangible fixed assets
in continuing operations (19) (32) (27)
Other exceptional losses 2 0 (450) (450)
------ ------ ------
5,567 4,513 9,140
Interest receivable and
similar income 213 43 270
Interest payable and similar
charges (263) (208) (444)
------- ------- ------
Profit on ordinary activities
before taxation 5,517 4,348 8,966
Taxation on profit on
ordinary activities 3 (1,710) (1,444) (2,978)
-------- -------- --------
Profit on ordinary activities
after taxation 3,807 2,904 5,988
Dividends paid and proposed 4 (930) 0 (1,674)
------- ------ -------
Retained profit 2,877 2,904 4,314
==== ==== ======
Earnings per ordinary share 8.19p 6.75p 13.45p
==== ==== ====
Adjusted earnings per share (see below) 8.19p 7.78p 14.43p
==== ==== ====
Note:
Adjusted earnings per ordinary share has been calculated on the post tax
earnings for each period before exceptional items in order to allow a better
comparison with the six months ended 30 September 1997.
The adjusted earnings per ordinary share figure for the year ended 31 March
1997 has been restated following finalisation of the tax treatment of the
exceptional item in that year's tax computations. The previous figure stated
was 14.91p.
John David Sports Plc
Interim results for the 6 months ended 30 September 1997
Balance sheet
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
1997 1996 1997
#000 #000 #000
Fixed assets 18,807 11,246 15,649
===== ===== =====
Stocks 18,400 11,842 16,530
Debtors and prepayments 3,761 2,908 3,208
Cash at bank and in hand 6,670 1,349 7,643
-------- -------- --------
28,831 16,099 27,381
Creditors due within one year (16,321) (9,724) (15,754)
--------- -------- ---------
Net current assets 12,510 6,375 11,627
Creditors due after more
than one year (5,407) (5,425) (4,393)
Provisions (992) (375) (842)
------- ------- ------
Net assets 24,918 11,821 22,041
===== ===== =====
Capital and reserves 24,918 11,821 22,041
===== ===== =====
The net proceeds arising from the company's flotation in October 1996 amounted
to #8.8 million. If the net assets at 30 September 1996 are adjusted to
reflect this amount then the net assets at that date would amount to #20.621
million.
Reconciliation of movement in shareholders' funds
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
1997 1996 1997
#000 #000 #000
Retained profit 2,877 2,904 4,314
New shares issued 0 6 8,816
------ ------ -------
2,877 2,910 13,130
Opening shareholders' funds 22,041 8,911 8,911
--------- ------- -------
Closing shareholders' funds 24,918 11,821 22,041
===== ===== =====
John David Sports Plc
Interim results for the 6 months ended 30 September 1997
Cashflow statement
Unaudited Unaudited Audited
first half first half year ended
1997 1996 31 March
1997
#000 #000 #000
Net cashflow from operating
activities 2,909 2,598 5,893
Returns on investments and
servicing of finance (50) (165) (174)
Taxation paid 0 (500) (2,020)
Investing activities (3,856) (1,924) (6,475)
Financing 24 (113) 8,966
------- ------- -------
(Decrease)/Increase in cash and
cash equivalents (973) (104) 6,190
==== ==== ====
Notes:
1.The undaudited results have been prepared under the historical cost
accounting rules and in accordance with applicable accounting standards
using the accounting policies set out in the financial statements for the year
ended 31 March 1997.
2.The exceptional item relates to the cost incurred in respect of the
terrorist device that exploded in Manchester on 15 June 1996 affecting the
trading outlets in this city.
3.Taxation has been estimated at the rate expected to be incurred in the
full year.
4.The directors have declared an interim dividend of 2.0p per ordinary
share of 5p, to be paid on 4 March 1998 to shareholders registered on 6
February 1998.
5.The financial information set out above does not constitute full accounts
within the meaning of Section 240 of the Companies Act 1985. The amounts
shown in respect of the year ended 31 March 1997 have been extracted from
the full statutory accounts, on which the auditors have made an unqualified
report. The statutory accounts have been filed with the Registrar of
Companies.
6.Copies of the announcement will be posted to shareholders and are
available to members of the general public from the company's registered
office: John David Sports Plc, Unit P14 Parklands, Heywood Distribution
Park,Pilsworth Road, Heywood, Lancashire OL10 2TT.
Review report by KPMG Audit Plc to John David Sports Plc:
We have reviewed the interim financial information for the six months ended 30
September 1997 set out in pages 2 to 4 which is the responsibility of,
and has been approved by, the directors. Our responsibility is to report on
the results of our review.
Our review was carried out having regard to the Bulletin "Review of Interim
Financial Information", issued by the Auditing Practices Board. This review
consisted principally of applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been consistently
applied, and making enquiries of management responsible for financial and
accounting matters. The review was substantially less in scope than an audit
performed in accordance with Auditing Standards and accordingly we do not
express an audit opinion on the interim financial information.
On the basis of our review:
* In our opinion the interim financial information has been prepared using
accounting policies consistent with those adopted by John David Sports Plc
in its financial statements for the year ended 31 March 1997.
* We are not aware of any material modifications that should be made to the
interim financial information as presented.
KPMG Audit Plc
Chartered Accountants
END
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