FY12: JD Sports profit dragged by Blacks takeover

JD Sports Fashion PLC reported pre-tax profit for the full year of 55.1 million pounds, 18.3 percent down from previous year and despite the revenues hike: 18.8 percent up to 1.26 billion pounds. Profits were mainly dragged by Profits for the group,

which also owns the JD Sports chain and the Bank fashion stores, slid 18.3 percent to 55.1 million pounds in the year to 2 February, dragged down by 14.9 million pounds of losses from the Blacks and Millets chains which sell waterproofs, boots and camping gear.

"Although initial results have been more disappointing than originally anticipated we now have a firm foothold in a different and growing lifestyle market in the UK," summed up Peter Cowgill, executive chairman, the situation of their recently acquired outdoor business.

JD also suffered 5.3 million pounds of exceptional charges including the cost of restructuring the wave of retail businesses it has acquired during the downturn – among them the Blacks and Millets group and online footwear business Cloggs.

The new businesses helped lift total sales by 18.8 percent to 1.3 billion pounds, disclosed the group when presenting their results. Thus, Board of Directors recognised that recent acquisition activity has impacted on short term but keep their hopes on these operations bringing return to the investors in the middle run.

Regarding the Outdoors business division, JD said their performance had since improved thanks to a new management team, better stock management, an ongoing cost cutting programme and investment in stores.

Executive chairman Peter Cowgill said: “Whilst the board recognises that recent acquisition activity has impacted on short term returns, it remains confident that the group is well positioned to deliver earnings growth and increased shareholder returns over the longer term.”

Analysts recommend buying

JD Sports Fashion (LON: JD)‘s stock had its “buy” rating reiterated by investment analysts at Investec in a note issued to investors on Wednesday, Analyst Ratings.Net reports. They currently have a 860 PENCE target price on the stock. Stock´s 1-year low is at 600 pence, while its 1-year high is of 845 pence. At current prices, company’s market cap is 348.4 million pounds.

A number of other firms have also recently commented on JD. Analysts at Cantor Fitzgerald also reiterated their “buy” recommendation on shares of JD Sports Fashion in a research note to investors on Friday, April 12th. Their current target price comes at 999.85 pence.

‘4-Traders’ analysis team meanwhile put the stress on how the stock is oversold. “Currently, the stock is oversold and, in the mid-term, it is trading in a bearish trend. In the short term, this trend is reversed upon contact with the 710 pounds area. JD Sports Fashion should be able to confirm its increase in the next trading sessions. This support is a trading opportunity in order to anticipate a technical rebound towards 756 pounds.” For the short term, analysts have flagged that the stock is reaching its support level:

“Therefore, the proximity of the 710 pounds pivot point and a lower limit of the bullish channel are an opportunity to take a long position in JD Sports Fashion. The first goal is a return in the 756 pounds resistance. A stop loss order can be set under the level currently tested.”