TIDMJD.
RNS Number : 2684W
JD Sports Fashion Plc
16 April 2019
16 April 2019
JD SPORTS FASHION PLC
PRELIMINARY RESULTS
FOR THE 52 WEEKSED 2 FEBRUARY 2019
JD Sports Fashion Plc (the 'Group'), a leading retailer of
sports, fashion and outdoor brands, today announces its Preliminary
Results for the 52 weeks ended 2 February 2019 (2018: 53 weeks
ended 3 February 2018).
2019 2018 % Change
GBPm GBPm
Revenue 4,717.8 3,161.4 +49.2%
Gross profit % 47.5% 48.4%
EBITDA* 488.4 385.2 +26.8%
Depreciation / amortisation (126.9) (76.4)
-------- --------
Operating profit (before exceptional items)* 361.5 308.8 +17.1%
Net interest expense (6.3) (1.4)
Profit before tax and exceptional items* 355.2 307.4 +15.5%
Exceptional items (15.3) (12.9)
-------- --------
Profit before tax 339.9 294.5 +15.4%
-------- --------
Basic earnings per ordinary share 26.90p 23.83p
Adjusted earnings per ordinary share* 28.44p 25.15p
Total dividend payable per ordinary share 1.71p 1.63p
Net cash at period end (a) 125.2 309.7
a) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings
b) Throughout this release '*' indicates first instance of a
term defined and explained in the Glossary at the end of these
preliminary results
Group Highlights
-- Record result with EBITDA (before exceptional items)
increased by a further 26.8%, being more than GBP100 million, to
GBP488.4 million (2018: GBP385.2 million).
-- Depreciation includes GBP29.4 million (2018: GBPnil) from the
combined Finish Line and JD business in the United States in the
33-week period post acquisition.
-- Headline profit before tax and exceptional items increased by
15.5% to GBP355.2 million (2018: GBP307.4 million).
-- Profit before tax increased to GBP339.9 million (2018: GBP294.5 million).
-- Encouraging total like for like sales* growth in global
Sports Fashion fascias of more than 6% achieved against a backdrop
of widely reported retail challenges in the Group's core* UK
market.
-- Robust gross margin performance in like for like Sports Fashion businesses*.
-- International development of the JD fascia continues:
a) Net increase of 39 stores (2018: 56 stores) for the JD fascia across Europe
b) A further 34 JD stores opened in the Asia Pacific region in
the year (2018: nine stores)
-- Acquisition of Finish Line in the United States significantly
extends the Group's global reach with the trial of the JD fascia
delivering encouraging early results.
-- Double digit EBITDA maintained in the Outdoor fascias after a
particularly weather-challenged trading period.
-- Revenue, gross margin and operating profit before exceptional
items of the two business segments are tabulated below:
Period to 2 February
2019 Sports Fashion Outdoor Total
GBPm GBPm GBPm
Revenue 4,296.4 421.4 4,717.8
----------------- ---------- --------
Gross margin % 48.0% 42.5% 47.5%
----------------- ---------- --------
EBITDA 478.4 10.0 488.4
Depreciation / amortisation(1) (112.6) (14.3) (126.9)
----------------- ---------- --------
Operating profit
/ (loss) before exceptional
items 365.8 (4.3) 361.5
----------------- ---------- --------
(1) Depreciation / amortisation includes non-trading charges for
the amortisation of various fascia names and brand names consequent
to the accounting on acquisitions. These charges are as
follows:
-- Sports Fashion: GBP7.5 million (2018: GBP2.7 million)
-- Outdoor: GBP4.5 million (2018: GBP4.5 million)
Period to 3 February
2018 Sports Fashion Outdoor Total
GBPm GBPm GBPm
Revenue 2,745.0 416.4 3,161.4
----------------- ---------- --------
Gross margin % 49.2% 43.5% 48.4%
----------------- ---------- --------
EBITDA 362.2 23.0 385.2
Depreciation / amortisation (62.2) (14.2) (76.4)
----------------- ---------- --------
Operating profit
before exceptional
items 300.0 8.8 308.8
----------------- ---------- --------
-- Final dividend payable increased by 5.1% to 1.44p (2018:
1.37p) bringing the total dividend payable for the year to 1.71p
(2018: 1.63p) per ordinary share, an increase of 4.9%.
Peter Cowgill, Executive Chairman, said:
"I am very pleased to report that the Group continues to make
excellent progress with Group EBITDA (before exceptional items)
increasing by a further 27%, being more than GBP100 million, to
GBP488.4 million (2018: GBP385.2 million). The headline profit
before tax and exceptional items increased by a further 16% to
GBP355.2 million (2018: GBP307.4 million) and, after delivering a
headline profit of GBP100 million for the first time in the year to
January 2015, the headline profit has now increased by more than
GBP250 million over the subsequent four years, a compound rise in
excess of 37% per annum. The Group profit before tax increased by
15% to GBP339.9 million (2018: GBP294.5 million).
"We firmly believe that the elevated and dynamic multibrand
multichannel proposition of the core JD fascia, which enjoys the
ongoing support of the key international brands, has the necessary
agility to continue to exceed consumer expectations and prosper in
an increasing number of international markets.
"We believe that our acquisition of the Finish Line business in
the United States, the largest market for sport lifestyle footwear
and apparel and the home to many of the global sportswear brands,
will have positive consequences for our long-term brand engagement
whilst significantly extending the Group's global reach. We
maintain our belief that Finish Line is capable of delivering
improved levels of profitability.
"Given the significance of Easter trading to the overall result
of the Group and the change in the timing relative to last year,
any announcement of like for like sales performance in the year to
date would lack precision. However, we are pleased with the
continued underlying positive performance of the Group and are
excited by the major developments ahead."
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Neil Greenhalgh, Chief Financial
Officer
MHP Communications Tel: 0203 128 8193
Andrew Jaques
Giles Robinson
Nessyah Hart
Charles Hirst
Executive Chairman's Statement
Introduction
I am very pleased to report that the Group continues to make
excellent progress with Group EBITDA (before exceptional items)
increasing by a further 27%, being more than GBP100 million, to
GBP488.4 million (2018: GBP385.2 million). The headline profit
before tax and exceptional items increased by a further 16% to
GBP355.2 million (2018: GBP307.4 million) and, after delivering a
headline profit of GBP100 million for the first time in the year to
January 2015, the headline profit has now increased by more than
GBP250 million over the subsequent four years, a compound rise in
excess of 37% per annum. The Group profit before tax increased by
15% to GBP339.9 million (2018: GBP294.5 million).
This new record result for our Group has been achieved with a
relentless focus on ensuring that, at all times, we provide a
compelling differentiated proposition to the consumer with an
attention-grabbing theatre both in stores and online. Consumers
expect our product and brand mix to be emotionally engaging,
exclusive and continually evolving with high levels of social media
penetration and an increasing pace of technology adoption across
our core demographic ensuring that new styles and trends spread
rapidly across a wide geography. Whilst very conscious of the
continued uncertainty surrounding the timing and nature of the UK's
exit from the European Union, we firmly believe that the elevated
and dynamic multibrand multichannel proposition of the core JD
fascia, which enjoys the ongoing support of the key international
brands, has the necessary agility to continue to exceed consumer
expectations and prosper in an increasing number of international
markets.
JD is not immune to the widely reported challenges to physical
retail in the UK with lower footfall on many high streets, malls
and retail parks combined with cost challenges from increasing
minimum wage rates and rises in business rates. Therefore, it is
very pleasing that the core UK and Ireland Sports Fashion fascias,
the most mature part of our Group, have delivered a further
increase in sales and profitability. This helps maintain our belief
that the store base at its current scale continues to provide a
positive influence on our future development as it raises brand
awareness, provides consumers with an opportunity to physically see
and try the product, and enables us to provide multiple delivery
points. The improved result was ultimately achieved through an
uncompromising focus, intensive management and continuous
analytical interpretation of a number of key principles:
-- Nurturing the close consumer connection
-- Satisfying a demanding aspirational consumer with
sector-leading physical retail environments and leading-edge
digital technologies which are both scalable across multiple
territories and adaptable to dynamic consumer expectations
-- Respecting the differentiated and often exclusive nature of
the product assortment by avoiding unnecessary short-term reactive
discounting
-- Maintaining maximum flexibility in the leased property portfolio
-- Delivering in-store initiatives to improve efficiency of store operations
The Group has also made further significant positive progress in
its existing international markets in Europe and Asia Pacific:
-- Europe: The JD fascia continues to gain momentum with a net
increase of 39 stores in the period with new stores in all of our
existing territories together with our first two JD stores in
Finland. JD now has a presence in 10 countries in mainland Europe
with our first store in Austria at Mariahilfer Strasse in Vienna
expected to open later in the first half.
Our team in Iberia are progressing with an accelerated process
to integrate the Sport Zone fascia into the Sprinter commercial
operations, with works to expand the warehouse in Alicante to
accommodate the Sport Zone stocks ongoing. We expect that this
integration process will be substantially complete by the end of
the first half.
-- Asia Pacific: At the period end there were 46 stores trading
as JD across the region with additional stores in the existing
territories of Malaysia and Australia together with our first
stores in Singapore, Thailand and South Korea where, working with
our local partner, Shoemarker Inc, we now have 16 JD stores which
includes 14 conversions of the multibrand Hot-T fascia which was
acquired in the previous year.
Finish Line and JD US
We believe that our acquisition of the Finish Line business in
the United States, the largest market for sport lifestyle footwear
and apparel and the home to many of the global sportswear brands,
will have positive consequences for our long-term brand engagement
whilst significantly extending the Group's global reach. We
maintain our belief that Finish Line is capable of delivering
improved levels of profitability. Recognising the existing digital
strengths, we intend to improve performance with a focus on four
main pillars:
-- Improving sales densities in stores with an enriched
proposition that delivers the elevated standards of visual
merchandising and retail theatre necessary to fully ignite the
consumers' desire to purchase both footwear and apparel
-- Improving product margins through buying disciplines and management of markdown
-- Exiting stores where property costs are not appropriate for the level of footfall
-- Appropriate scaling of central overheads
We opened our first five JD stores in the United States prior to
the key holiday season which included the conversion of four
existing Finish Line stores. It is too early to make any
conclusions on the potential for JD in the United States as these
stores do not currently contain a full representation of the JD
product offer, particularly apparel. Given the lead times on
ordering we do not expect this situation to change materially until
the second half of the year. These stores have also not had the
benefit of full digital support which we anticipate will commence
later in the spring leveraging off the Finish Line digital
expertise. That said, we are encouraged with the early results and
we are using the learnings to further refine our proposition.
We are also pleased with the positive performance of Finish Line
in the second half of the year. We will look to drive further
improvements in the performance of Finish Line in malls whilst
developing JD in new locations in the major metropolitan areas with
this dual fascia approach maximising our reach across different
demographics.
We have seconded a number of key management personnel from the
core business to assist the Finish Line team in executing this
plan. We firmly believe that these secondments will provide
positive benefits to Finish Line in the short term and to the wider
Group in the longer term as our team further develops the skills
necessary to deliver success with an increasingly international
emphasis.
Outdoor
The very hot weather through the summer and very mild weather
through much of the autumn and winter made this an exceptionally
challenging year for our Outdoor businesses. However, maintaining a
double digit EBITDA profit in these adverse circumstances
demonstrates that our proposition is becoming increasingly
resilient to unfavourable weather events. Greater integration of
the Outdoor businesses, with Blacks and Go Outdoors having access
to one pool of stock with common merchandising systems and shared
central warehousing, will add further resilience to the overall
proposition once these projects are completed later in the
year.
Infrastructure
The first phase of works to fit out the 352,000 sqft extension
at our primary Kingsway warehouse has now been completed, enabling
a partial use of the additional space to receive inbound stocks.
Works to install additional automation equipment in the extended
space are ongoing with completion expected by the end of the first
half. The transition to the enlarged site has inevitably caused
some disruption and inefficiency to our operations with increased
downtime from the existing automation equipment and frequent
changes in the standard operating procedures. These issues have
necessitated increased levels of manual process, a situation which
we expect to continue for most of the first half. Elsewhere, the
project to extend Sprinter's warehouse in Alicante to accommodate
the additional stocks required for the future fulfilment of the
Sport Zone stores in Portugal and the Canary Islands is ongoing. We
expect this project to be completed during the summer.
Sports Fashion
Sports Fashion has had another exceptional year with operating
profits (before exceptional items) increasing by 22% to GBP365.8
million (2018: GBP300.0 million). This includes a contribution of
GBP26.6 million from the combined Finish Line and JD business in
the United States in the 33-week period post acquisition. After
recognising exceptional items of GBP13.7 million (2018: GBP9.6
million), the operating profit was GBP352.1 million (2018: GBP290.4
million).
After a strong second half, the total like for like sales across
our global Sports Fashion fascias, including online, grew by 6%
with double digit growth in both Europe and Asia Pacific. Given the
highly competitive environment with multiple points of
distribution, including direct to consumer from the international
brands themselves, this is an excellent performance and helps
cement our positive view of the potential for further growth for JD
in international markets.
We are also pleased with the robustness in the margin in our
like for like businesses which increased slightly. The overall
margin though fell to 48.0% a result of the dilution from the newly
acquired businesses, principally Finish Line and Sport Zone, where
we believe there will be opportunities to reduce levels of markdown
and raise gross margins in future years. We will continue to
respect the premium nature of the product and the retail experience
by avoiding what we believe is unnecessary short-term reactive
discounting when others, including the international brands
themselves, may take a different approach. The margin also
benefitted from favourable movements in foreign exchange
contracts.
Globally, we have opened a net 83 new JD stores with 78 of these
stores in international markets reflecting our increasingly global
vision.
Europe
We are pleased with the progression of the JD fascia in its
European markets with a net increase of 39 stores in the year and
we would anticipate opening a similar number of stores in the new
financial year. The positive consumer reaction to our proposition
has given us the confidence to progress new store opportunities
with a larger footprint in key markets.
Asia Pacific
Further afield, we are also pleased with our progression in the
Asia Pacific region with 34 stores either opened or converted to JD
in the period. This includes 10 new stores in Australia with a
flagship store on Pitt Street in the centre of Sydney and our first
stores in both Brisbane and Perth.
During the period we increased our shareholding in the joint
venture in South Korea to 50% and, whilst linguistic differences
increase the challenges of operating in this country, we continue
to make a number of learnings which will assist our wider future
international development. We now have 16 stores trading as JD in
the country.
Elsewhere, we have also opened our first stores in both
Singapore and Thailand. It is too early to comment on the
performance in these newer territories although we are pleased with
their positive progress to date.
United States
There were five JD stores trading at the end of the year with
conversions of existing Finish Line stores in Chicago, Indianapolis
and Columbus; the conversion and extension of an existing store in
Washington D.C.; and a new store in a premium mall in Houston. The
conversion of the Finish Line store at the Mall of America in
Bloomington, Minnesota, is ongoing with this store due to open
shortly.
It is too early to draw any conclusions from this limited trial
over a wide geography without the back up of the trading website
which will be launched later in the spring. We are encouraged by
the performance of the new categories that we have introduced and
we will garner further insight into the longer term potential of JD
in the United States following the introduction of additional
product later in the year which is more representative of the
global JD offer. We are excited to move on to the next phase of our
development including the establishment of JD in major metropolitan
areas.
Away from JD, we continue to make progress in our other Sports
Fashion businesses:
Premium Branded Fashion (UK)
We are pleased with the progress made by our principal premium
brand Fashion businesses with Mainline Menswear in particular
continuing to grow strongly. We believe that these businesses are
an important part of our Group, further elevating our overall
proposition. We continue to make selective complementary
acquisitions in this area where they expand our geographical
presence or brand touch.
Sprinter, Sport Zone, Sports Unlimited Retail and Chausport
(Europe)
Our overall results in Iberia have, as anticipated, been
impacted by a significant initial loss of GBP18.2 million in the
Sport Zone business where we have had to clear excess legacy stocks
aggressively. We expect a further small operating loss in the first
half of the new financial year as we complete this process. The
process to integrate the Sport Zone stores in Portugal and the
Canary Islands into the Sprinter infrastructure is ongoing.
Elsewhere, Perry Sport and Aktiesport in Sports Unlimited Retail
in the Netherlands have delivered a profit over the full year for
the first time with previous actions to reduce the excessive store
footprint and sell through the legacy fragmented stocks having
positive results.
We are pleased with developments at Chausport in France which
has delivered an improved result and has developed a new store
format which we believe is capable of delivering further
growth.
Finish Line (United States)
Whilst we are committed to establishing JD in the United States,
we are equally focussed on working with the local management team
on driving improvements in the Finish Line performance. We intend
to complement Finish Line's strengths (particularly digital, where
online already contributes more than 20% of sales) with JD's
strengths on buying and merchandising processes and its ability to
create an innovative and exciting retail theatre. A number of
initiatives are now underway to improve the visual merchandising
standards across the Finish Line portfolio with new fixtures
planned for approximately 70 stores ahead of the Back to School
period to help drive additional apparel sales.
Sam Sato, the CEO of Finish Line at acquisition, retired at the
end of the year. Following a managed transition, a joint leadership
team is now in place comprising the Finish Line CFO and JD's Global
Retail Director. Working together, this combination will help
ensure that development of the proposition is supported by
increased rigour to the financial analysis. We have also seconded a
number of key commercial managers from the core business to assist
the Finish Line team.
On an unaudited proforma basis over the full 12 month period
that ended on 2 February 2019, the US business (including JD)
delivered an EBITDA (before exceptional items) of $125.4 million on
net sales of $1,917.3 million with total like for like sales in the
core Finish Line business (excluding Macy's concessions) growing by
7%. This growth was driven by a strong performance online with
growth in excess of 20% although it is pleasing that like for like
sales in stores were also positive in this 12 month period. The
product margin for this 12 month period improved slightly to 42.2%
(2018: 41.5%) and, whilst this is encouraging, we are mindful that
disciplines on clearing fragmented and dated stock can be improved
further.
JD Gyms (UK)
We are pleased with the continued development of our gyms
business which comprised 23 gyms at the end of the period and a
membership base in excess of 100,000 members. The 10 gyms opened in
the period included four gyms where the site was acquired from an
existing operator. This is an effective way of adding further scale
more rapidly with an established membership but it is an approach
we will only adopt if the locations are well-located, appropriately
costed and pass our usual rigorous assessment criteria. One further
gym has opened subsequently.
Outdoor
This has been a particularly weather-challenged year for our
Outdoor businesses. Whilst the late winter weather was a positive
for our Outdoor businesses in the early part of the year, this was
then followed by a very hot and dry summer, which negatively
impacted demand for jackets and other waterproof apparel. This
situation did not improve in the autumn and early winter which were
both unseasonably mild.
We are encouraged, therefore, that in this difficult period the
total like for like sales, including online, across our combined
fascias has remained marginally positive. This reflects the hard
work from our teams over a number of years to develop flexible
propositions which have increased resilience to adverse weather
events. There was some margin sacrifice to achieve this,
particularly in the second half of the year, with the overall
margin for the year reducing by 1.0% to 42.5% (2018: 43.5%).
Our Outdoor businesses were still significantly cash generative
though with a positive EBITDA (before exceptional items) in the
period of GBP10.0 million (2018: GBP23.0 million). After
depreciation and a further charge for the non-trading amortisation
of fascia and various brand names, there was an operating loss
(before exceptional items) of GBP4.3 million (2018: profit GBP8.8
million).
The project to transfer Go Outdoors onto the Group's primary ERP
system is ongoing with completion scheduled for later in the first
half. Elsewhere, the project to fit out a new 350,000 sqft
dedicated warehouse facility for the Outdoor businesses in
Middlewich is also nearing completion with stock already being
received at this new site. Fulfilment for the Go Outdoors stores
and website will commence shortly with the stocks for the Blacks
and Millets businesses expected to transfer into this facility in
the second half of the year. We expect these developments to bring
long term financial and operational benefits.
Financial Summary
Revenue, gross margin and overheads
Total revenue increased by nearly 50% in the year to GBP4,717.8
million (2018: GBP3,161.4 million). This includes GBP1,237.5
million from businesses which were not like for like for the year,
principally Finish Line (GBP956.6 million) for the 33 weeks post
acquisition and Sport Zone (GBP183.9 million), which was a member
of the Group for the full year following completion of the
acquisition on 31 January 2018. Like for like store sales for the
52 week period across all Group fascias, including those in Europe
and Asia Pacific, increased by 1% with the overall like for like
growth including online increasing by more than 5%.
Total gross margin in the year of 47.5% was slightly behind the
prior year (2018: 48.4%) as a consequence of the lower margins in
the acquired Finish Line and Sport Zone businesses.
Operating profits and results
Operating profit (before exceptional items) increased
substantially by 17% to GBP361.5 million (2018: GBP308.8 million)
following a further excellent performance in our Sports Fashion
fascias. The result includes a profit of GBP26.6 million in Finish
Line for the part period after acquisition which is offset by an
initial loss of GBP18.2 million from Sport Zone.
There were exceptional items in the year of GBP15.3 million
(2018: GBP12.9 million) primarily from the non-cash impairment of
certain intangible assets.
The exceptional items comprised:
2019 2018
GBPm GBPm
Non-cash impairment of intangible assets
(1) 8.1 11.6
Movement in fair value of put and call
options (2) 5.6 1.3
Integration and consolidation of Outdoor 1.6 -
fascias (3)
------ ------
Total exceptional charge 15.3 12.9
====== ======
1. The impairment in the current period relates to the
impairment of the goodwill arising in prior years on the
acquisition of Source Lab Limited, JD Sports Fashion South Korea
and the partial impairment of the goodwill arising in prior years
on the acquisition of Champion. The impairment in the previous
period related to the impairment of the fascia name arising on the
acquisition of Next Athleisure Pty Limited and JD Sports Fashion
SDN BHD and the goodwill arising in prior years on the acquisition
of Tiso Group Limited.
2. Movement in the fair value of the liabilities in respect of the put and call options.
3. Costs arising from the integration and consolidation of the
principal IT systems, warehousing and other infrastructure in Go
Outdoors and Blacks.
Group profit before tax in the year ultimately increased by
15.4% to GBP339.9 million (2018: GBP294.5 million).
Working capital and cash
During the year, the Group agreed a new syndicated committed
GBP400 million bank facility which has a term of five years
expiring on 29 May 2023. The new facility, together with the
ongoing strong cash generation in our core retail fascias has been
used to fund the significant investments that we have made in the
period on both acquisitions, principally Finish Line with a
consideration of GBP400.5 million before net cash acquired of
GBP50.9 million, and capital expenditure with the gross spend in
the period (excluding disposal costs) increasing slightly to
GBP191.0 million (2018: GBP186.6 million). Consequent to these
significant investments, we maintained a net cash position at the
end of the period of GBP125.2 million (2018: GBP309.7 million)
although the year end represents one of the highest points for cash
in the working capital cycle.
The primary focus of our capital expenditure remains our retail
fascias with the spend in the year on property fit outs increasing
significantly to GBP106.9 million (2018: GBP79.7 million). Within
this, the spend on the international businesses increased to
GBP59.2 million (2018: GBP38.6 million). Elsewhere, the programme
of works to fit out the 352,000 sqft extension to our Kingsway
warehouse facility is now nearing completion with total spend in
the year at the site of GBP36.1 million (2018: GBP24.5 million). We
would anticipate further costs of around GBP4 million in the new
financial year to complete this project.
Net stocks of GBP763.8 million have increased substantially
relative to the prior year (2018: GBP478.0 million) principally as
a result of stocks in Finish Line of GBP210.7 million following the
acquisition of this business earlier in the year. There has also
been increased investment in stocks consistent with the ongoing
development of the existing international businesses. We maintain a
robust approach to stock management with continuous intense
monitoring of very detailed metrics.
Store Portfolio
During the period, store numbers have moved as follows:
Sports Fashion Fascias
JD JD JD JD JD Fash'n Other Other Fin.Lin Fin.Line
US & UK e (Macy's)
(Store UK & ROI Europe AsiaPac Size Size Europe AsiaPac (own) (iii) Total
Nos.) (ii)
(i)
Period
start 385 213 12 - 38 648 77 445 67 - - 1,237
New stores 28 38 16 1 3 86 12 10 1 - - 109
Transfers (1) 2 18 4 - 23 1 (2) (18) (4) - -
Acquired - - - - - - 12 - - 556 375 943
Closures (22) (1) - - - (23) (18) (15) (17) (23) (26) (122)
---------- -------- --------- --- ------ ------ ------- -------- ---------- -------- --------- -------
Period
end 390 252 46 5 41 734 84 438 33 529 349 2,167
---------- -------- --------- --- ------ ------ ------- -------- ---------- -------- --------- -------
(000 Sqft)
Period
start 1,525 541 56 - 60 2,182 179 2,953 284 - - 5,598
New stores 139 115 76 4 3 337 54 60 4 - - 455
Transfers (6) 5 71 18 (4) 84 10 (5) (71) (18) - -
Acquired - - - - - - 39 - - 1,879 322 2,240
Closures (92) (1) - - - (93) (34) (139) (61) (64) (11) (402)
Remeasure 17 1 (2) - - 16 2 - - - - 18
Period
end 1,583 661 201 22 59 2,526 250 2,869 156 1,797 311 7,909
---------- -------- --------- --- ------ ------ ------- -------- ---------- -------- --------- -------
(i) Chausport (France), Sprinter (Spain), Sport Zone (Portugal,
Spain & Canary Islands) and Perry Sport / Aktiesport
(Netherlands)
(ii) Glue (Australia) and Hot-T (South Korea)
(iii) Being Finish Line branded concessions within Macy's department stores only
In addition, there were 23 JD branded Gyms at the period end
after 10 openings in the year with one further gym opened to date
in the current financial year.
Outdoor Fascias
Ultimate Go Go Outdoors
(Store Nos.) Blacks Millets Outdoors Tiso Outdoors Fishing Total
Period start 57 100 7 13 60 - 237
New stores 1 4 - 1 3 - 9
Transfers - - (1) - 1 - -
Closures (2) (5) - - - - (7)
Acquired - - - - - 14 14
--------- ---------- ---------- ------- ---------- ------------ --------
Period end 56 99 6 14 64 14 253
--------- ---------- ---------- ------- ---------- ------------ --------
(000 Sqft)
Period start 206 211 162 88 1,794 - 2,461
New stores 5 7 - 8 94 - 114
Transfers - - (16) - 16 - -
Closures (13) (9) - - - - (22)
Acquired - - - - - 79 79
Period end 198 209 146 96 1,904 79 2,632
--------- ---------- ---------- ------- ---------- ------------ --------
Dividends and Earnings per Share
The Board proposes paying a final dividend of 1.44p (2018:
1.37p) bringing the total dividend payable for the year to 1.71p
(2018: 1.63p) per ordinary share, an increase of 5%. Subject to
shareholder approval at our AGM, the proposed final dividend will
be paid on 5 August 2019 to all shareholders on the register at 28
June 2019. We continue to believe that it is in the longer term
interests of all shareholders to keep dividend growth restrained so
as to maximise the available funding for our ongoing development
opportunities.
The adjusted earnings per ordinary share before exceptional
items have increased by 13% to 28.44p (2018: 25.15p).
The basic earnings per ordinary share have increased by 13% to
26.90p (2018: 23.83p).
People
The commitment of our employees is crucial to our success and I
would like to thank everyone in our businesses for their support in
delivering another set of excellent results. The increasingly
global scale of our Group provides a variety of opportunities for
our colleagues to develop their individual careers and we are
committed to supporting them to achieve their ambitions and to give
them the quality of employment that reflects the significant
contribution that they make to the Group.
Brian Small retired as Chief Financial Officer during the year
after almost 15 years in the role and I would like to thank him for
his valuable contribution and support over this time.
Offer for Footasylum Plc
On 18 March 2019, in conjunction with the board at Footasylum
Plc, we announced the terms of an offer to be made for the whole of
the issued and to be issued ordinary share capital of the
Footasylum business. This offer document was posted to the
Footasylum shareholders on 22 March 2019 and was subsequently
declared unconditional in all respects on 12 April 2019. We believe
the combination of these two complementary businesses will deliver
significant operational and strategic benefits going forward.
Pretty Green
On 4 April 2019, the Group acquired, via its 100% subsidiary
PG2019 Limited, the business and certain assets of Pretty Green
Limited (in administration), the boutique men's clothing brand,
from its administrator. The acquisition included the business,
brand and website as well as a flagship store in Manchester. Cash
consideration of GBP1.5 million was paid on completion with the
Group also assuming a further GBP1.8 million of debt.
Impact of IFRS 16
The Group will adopt the requirements of IFRS16 'Leases' for the
first time in its results to 1 February 2020. As a result, we will
recognise a balance sheet asset and corresponding obligation
relating to our use of properties and other assets leased under
multi-year agreements.
Under IFRS 16 the income statement expense comprises a
straight-line depreciation charge on the right-of-use asset and a
front-loaded interest charge on the lease liability, both over the
term of the lease. For an individual lease, this provides an
overall front-loaded expense profile compared with the
straight-line rental charge recognised under IAS 17.
The discount rates applied have been based on the incremental
borrowing rate where the implicit rate in the lease is not readily
determinable. The lease term comprises the non-cancellable lease
term, in addition to optional periods when the Group is reasonably
certain to exercise an option to extend (or not to terminate) a
lease.
The Group will adopt the modified approach to transition where
the initial asset values will be equal to the present value of the
future lease payments as at the date of transition. This will
result in existing leases being capitalised over their remaining
lives, as if they had just been entered into.
There is no cashflow impact from the transition to IFRS16 and
the adoption of this standard will have no impact on the way that
we evaluate store investment opportunities.
The Group has assessed the impact that the application of IFRS16
has on its income statement for the period ended 2 February 2019
and on its balance sheet as at that date. This is presented in Note
6.
Current Trading and Outlook
While we recognise that there is uncertainty surrounding the
nature and timing of the UK's exit from the European Union, we are
cognisant of the potential consequences of a disorderly exit on
supply chains, tariffs, exchange rates and consumer demand.
Notwithstanding this uncertainty, the Board remains confident in
the international potential of the JD proposition.
Given the significance of Easter trading to the overall result
of the Group and the change in the timing relative to last year,
any announcement of like for like sales performance in the year to
date would lack precision. However, we are pleased with the
continued underlying positive performance of the Group and are
excited by the major developments ahead.
Our next scheduled update will take place upon the announcement
of our Interim Results which is scheduled for 10 September
2019.
Peter Cowgill
Executive Chairman
16 April 2019
Consolidated Income Statement
For the 52 weeks ended 2 February 2019
52 weeks to 53 weeks to
2 February 2019 3 February 2018
Note GBPm GBPm
Revenue 4,717.8 3,161.4
Cost of sales (2,474.5) (1,629.8)
----------------------- -----------------------
Gross profit 2,243.3 1,531.6
Selling and distribution expenses
- normal (1,632.9) (1,080.5)
Administrative expenses - normal (253.6) (144.7)
Administrative expenses - exceptional (15.3) (12.9)
Other operating income 4.7 2.4
Operating profit 346.2 295.9
Before exceptional items 361.5 308.8
Exceptional items 2 (15.3) (12.9)
-----------------------
Operating profit 346.2 295.9
Financial income 1.2 0.6
Financial expenses (7.5) (2.0)
----------------------- -----------------------
Profit before tax 339.9 294.5
Income tax expense (75.7) (58.1)
Profit for the period 264.2 236.4
----------------------- -----------------------
Attributable to equity holders
of the parent 261.8 231.9
Attributable to non-controlling
interest 2.4 4.5
Basic earnings per ordinary share 3 26.90p 23.83p
----------------------- -----------------------
Diluted earnings per ordinary
share 3 26.90p 23.83p
----------------------- -----------------------
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 2 February 2019
52 weeks to
2 February 53 weeks to
2019 3 February 2018
GBPm GBPm
Profit for the period 264.2 236.4
Other comprehensive income:
Items that may be classified subsequently
to the Consolidated Income Statement:
Exchange differences on translation
of foreign operations (0.8) 6.4
Total other comprehensive income for
the period (0.8) 6.4
----------------- ----------------------
Total comprehensive income and expense
for the period
(net of income tax) 263.4 242.8
----------------- ----------------------
Attributable to equity holders of the
parent 260.0 237.1
Attributable to non-controlling interest 3.4 5.7
----------------- ----------------------
Consolidated Statement of Financial Position
As at 2 February 2019
As at As at
2 February 3 February
2019 2018
GBPm GBPm
Assets
Intangible assets 394.3 211.0
Property, plant and equipment 539.8 376.9
Other assets 79.1 66.5
Investment in associate 0.1 -
Total non-current assets 1,013.3 654.4
----------------- -------------------
Inventories 763.8 478.0
Trade and other receivables 177.2 146.3
Cash and cash equivalents 251.2 347.5
----------------- -------------------
Total current assets 1,192.2 971.8
----------------- -------------------
Total assets 2,205.5 1,626.2
----------------- -------------------
Liabilities
Interest-bearing loans and borrowings (63.8) (26.8)
Trade and other payables (808.1) (623.2)
Provisions (1.3) (2.1)
Income tax liabilities (27.3) (30.2)
----------------- -------------------
Total current liabilities (900.5) (682.3)
----------------- -------------------
Interest-bearing loans and borrowings (62.2) (11.0)
Other payables (153.8) (91.5)
Provisions (1.2) (1.8)
Deferred tax liabilities (11.0) (5.3)
----------------- -------------------
Total non-current liabilities (228.2) (109.6)
----------------- -------------------
Total liabilities (1,128.7) (791.9)
----------------- -------------------
Total assets less total liabilities 1,076.8 834.3
----------------- -------------------
Capital and reserves
Issued ordinary share capital 2.4 2.4
Share premium 11.7 11.7
Retained earnings 1,016.3 773.6
Other reserves (21.6) (17.3)
Total equity attributable to equity holders
of the parent 1,008.8 770.4
Non-controlling interest 68.0 63.9
----------------- -------------------
Total equity 1,076.8 834.3
----------------- -------------------
Consolidated Statement of Changes in Equity
For the 52 weeks ended 2 February 2019
Total Equity
Attributable
Foreign to Equity
Ordinary Currency Holders
Share Share Retained Treasury Other Translation of The
Capital Premium Earnings Reserve Equity Reserve Parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 28
January
2017 2.4 11.7 543.3 (15.9) (0.6) 11.3 552.2
Profit for the
period - - 231.9 - - - 231.9
Other comprehensive
income:
Exchange
differences
on translation of
foreign
operations - - - - - 5.2 5.2
Total other
comprehensive
income - - - - - 5.2 5.2
------------ -------------- --------------- --------------- ------------- ------------------ ------------------
Total comprehensive
income for the
period - - 231.9 - - 5.2 237.1
Dividends to equity
holders - - (15.2) - - - (15.2)
Put options held by
non-controlling
interest - - - - (33.2) - (33.2)
Acquisition of
non-controlling
interest - - (0.3) - - - (0.3)
Divestment of
non-controlling
interest - - 13.9 15.9 - - 29.8
Non-controlling
interest - - - - - - -
arising on
acquisition
Balance at 3
February
2018 2.4 11.7 773.6 - (33.8) 16.5 770.4
Profit for the
period - - 261.8 - - - 261.8
Other comprehensive
income:
Exchange
differences
on translation of
foreign
operations - - - - - (1.8) (1.8)
------------ -------------- --------------- --------------- ------------- ------------------ ------------------
Total other
comprehensive
income - - - - - (1.8) (1.8)
------------ -------------- --------------- --------------- ------------- ------------------ ------------------
Total comprehensive
income for the
period - - 261.8 - - (1.8) 260.0
Dividends to equity
holders - - (15.9) - - - (15.9)
Put options held by
non-controlling
interest - - - - (2.5) - (2.5)
Acquisition of
non-controlling
interest - - (4.1) - - - (4.1)
Divestment of
non-controlling
interest - - 0.9 - - - 0.9
Non-controlling - - - - - - -
interest
arising on
acquisition
Share capital - - - - - - -
issued
Balance at 2
February
2019 2.4 11.7 1,016.3 - (36.3) 14.7 1,008.8
------------ -------------- --------------- --------------- ------------- ------------------ ------------------
Consolidated Statement of Changes in Equity (continued)
For the 52 weeks ended 2 February 2019
Total Equity
Attributable Non-Controlling
to Equity Interest Total
Holders GBPm Equity
of The Parent GBPm
GBPm
Balance at 28 January
2017 552.2 26.6 578.8
Profit for the period 231.9 4.5 236.4
Other comprehensive income:
Exchange differences on
translation of foreign
operations 5.2 1.2 6.4
Total other comprehensive
income 5.2 1.2 6.4
-------------- ----------------------- --------------
Total comprehensive income
for the period 237.1 5.7 242.8
Dividends to equity holders (15.2) (8.8) (24.0)
Put options held by non-controlling
interest (33.2) - (33.2)
Acquisition of non-controlling
interest (0.3) (0.9) (1.2)
Divestment of non-controlling
interest 29.8 25.7 55.5
Non-controlling interest
arising on acquisition - 15.6 15.6
Balance at 3 February
2018 770.4 63.9 834.3
Profit for the period 261.8 2.4 264.2
Other comprehensive income:
Exchange differences on
translation of foreign
operations (1.8) 1.0 (0.8)
-------------- ----------------------- --------------
Total other comprehensive
income (1.8) 1.0 (0.8)
-------------- ----------------------- --------------
Total comprehensive income
for the period 260.0 3.4 263.4
Dividends to equity holders (15.9) (0.7) (16.6)
Put options held by non-controlling
interest (2.5) - (2.5)
Acquisition of non-controlling
interest (4.1) (5.2) (9.3)
Divestment of non-controlling
interest 0.9 0.4 1.3
Non-controlling interest
arising on acquisition - (0.2) (0.2)
Share capital issued - 6.4 6.4
Balance at 2 February
2019 1,008.8 68.0 1,076.8
-------------- ----------------------- --------------
Consolidated Statement of Cash Flows
For the 52 weeks ended 2 February 2019
52 weeks to 53 weeks to
2 February 3 February
2019 2018
GBPm GBPm
Cash flows from operating activities
Profit for the period 264.2 236.4
Income tax expense 75.7 58.1
Financial expenses 7.5 2.0
Financial income (1.2) (0.6)
Depreciation and amortisation of non-current
assets 115.0 71.3
Forex losses on monetary assets and liabilities 2.5 2.2
Impairment of other intangibles and non-current
assets 11.9 5.1
Loss on disposal of non-current assets 2.0 1.6
Other exceptional items 7.2 1.3
Impairment of goodwill and fascia names 8.1 11.6
Increase in inventories (26.2) (79.0)
Increase in trade and other receivables (22.5) (22.1)
Increase in trade and other payables 21.2 110.7
Interest paid (7.5) (2.0)
Income taxes paid (80.3) (57.8)
----------------- -----------------
Net cash from operating activities 377.6 338.8
----------------- -----------------
Cash flows from investing activities
Interest received 1.2 0.6
Proceeds from sale of non-current assets 1.0 6.7
Investment in software development (12.3) (4.5)
Acquisition of property, plant and equipment (173.6) (169.3)
Acquisition of non-current other assets (5.1) (12.8)
Acquisition of subsidiaries, net of cash
acquired (362.0) (24.9)
Net cash used in investing activities (550.8) (204.2)
----------------- -----------------
Cash flows from financing activities
Draw down / (repayment) of interest-bearing
loans and borrowings 82.1 (11.4)
Repayment of finance lease liabilities (1.5) (0.5)
Draw down of finance lease liabilities 5.8 3.3
Subsidiary shares issued in the period 6.4 -
Equity dividends paid (15.9) (15.2)
Dividends paid to non-controlling interest
in subsidiaries (0.7) (8.8)
----------------- -----------------
Net cash from / (used in) financing activities 76.2 (32.6)
----------------- -----------------
Net (decrease) / increase in cash and
cash equivalents (97.0) 102.0
Cash and cash equivalents at the beginning
of the period 334.6 234.4
Foreign exchange gains / (losses) on
cash and cash equivalents 0.1 (1.8)
----------------- -----------------
Cash and cash equivalents at the end
of the period 237.7 334.6
----------------- -----------------
Analysis of Net Cash
As at 2 February 2019
At 3 Non- At 2
February On acquisition Cash cash February
2018 of subsidiaries flow movements 2019
GBPm GBPm GBPm GBPm GBPm
Cash at bank and
in hand 347.5 51.9 (148.3) 0.1 251.2
Overdrafts (12.9) - (0.6) - (13.5)
---------------- ----------------------- ------------- ----------------- ----------------
Cash and cash
equivalents 334.6 51.9 (148.9) 0.1 237.7
Interest-bearing
loans
and borrowings:
Bank loans (20.8) (1.2) (52.4) - (74.4)
Syndicated bank
facility - - (30.0) - (30.0)
Finance lease
liabilities (3.8) - (4.3) - (8.1)
Other loans (0.3) - 0.3 - -
---------------- ----------------------- ------------- ----------------- ----------------
309.7 50.7 (235.3) 0.1 125.2
---------------- ----------------------- ------------- ----------------- ----------------
1. Segmental analysis
IFRS 8 'Operating Segments' requires the Group's segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Operating Decision
Maker to allocate resources to the segments and to assess their
performance. The Chief Operating Decision Maker is considered to be
the Executive Chairman of JD Sports Fashion Plc.
Information reported to the Chief Operating Decision Maker is
focussed on the nature of the businesses within the Group. The
Group's operating and reportable segments under IFRS 8 are
therefore Sports Fashion and Outdoor.
The Chief Operating Decision Maker receives and reviews
segmental operating profit. Certain central administrative costs
including Group Directors' salaries are included within the Group's
core Sports Fashion result. This is consistent with the results as
reported to the Chief Operating Decision Maker.
IFRS 8 requires disclosure of information regarding revenue from
major products and customers. The majority of the Group's revenue
is derived from the retail of a wide range of apparel, footwear and
accessories to the general public. As such, the disclosure of
revenues from major customers is not appropriate. Disclosure of
revenue from major product groups is not provided at this time due
to the cost involved to develop a reliable product split on a same
category basis across all companies in the Group.
Intersegment transactions are undertaken in the ordinary course
of business on arm's length terms.
The Board consider that certain items are cross divisional in
nature and cannot be allocated between the segments on a meaningful
basis. Net funding costs and taxation are treated as unallocated
reflecting the nature of the Group's syndicated borrowing
facilities and its tax group. A deferred tax liability of GBP11.0
million (2018: GBP5.3 million) and an income tax liability of
GBP27.3 million (2018: GBP30.2 million) are included within the
unallocated segment. During the year, there has been a draw down on
the syndicated bank facility of GBP30 million. This has been
treated as unallocated.
Each segment is shown net of intercompany transactions and
balances within that segment. The eliminations remove intercompany
transactions and balances between different segments which
primarily relate to the net down of long term loans and short term
working capital funding provided by JD Sports Fashion Plc (within
Sports Fashion) to other companies in the Group, and intercompany
trading between companies in different segments.
Business segments
Information regarding the Group's reportable operating segments
for the 52 weeks to 2 February 2019 is shown below:
Income statement
Sports
Fashion Outdoor Total
GBPm GBPm GBPm
Gross revenue 4,296.4 421.4 4,717.8
--------- ---------- ----------
Operating profit / (loss) before
exceptional items 365.8 (4.3) 361.5
Exceptional items (13.7) (1.6) (15.3)
--------- ---------- ----------
Operating profit / (loss) 352.1 (5.9) 346.2
Financial income 1.2
Financial expenses (7.5)
--------- ---------- ----------
Profit before tax 339.9
Income tax expense (75.7)
--------- ---------- ----------
Profit for the period 264.2
--------- ---------- ----------
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 2,039.2 255.9 - (89.6) 2,205.5
Total liabilities (978.5) (171.5) (68.3) 89.6 (1,128.7)
--------------- -------- ------------ ------------- ------------
Total segment net
assets / (liabilities) 1,060.7 84.4 (68.3) - 1,076.8
--------------- -------- ------------ ------------- ------------
Other segment information
Sports Fashion Outdoor Total
GBPm GBPm GBPm
Capital expenditure:
Software development 12.3 - 12.3
Property, plant and equipment 159.7 13.9 173.6
Non-current other assets 5.1 - 5.1
----------------- -------- ---------
Depreciation, amortisation and impairments:
Depreciation and amortisation of
non-current assets 101.4 13.6 115.0
Impairment of intangible assets
(exceptional) 8.1 - 8.1
Impairment of non-current assets
(non-exceptional) 11.2 0.7 11.9
----------------- -------- ---------
The comparative segmental results for the 53 weeks to 3 February
2018 are as follows:
Income statement
Sports Fashion
GBPm Outdoor Total
GBPm GBPm
Gross revenue 2,745.0 416.4 3,161.4
--------------- ---------- --------
Operating profit before exceptional
items 300.0 8.8 308.8
Exceptional items (9.6) (3.3) (12.9)
--------------- ---------- --------
Operating profit 290.4 5.5 295.9
Financial income 0.6
Financial expenses (2.0)
--------------- ---------- --------
Profit before tax 294.5
Income tax expense (58.1)
--------------- ---------- --------
Profit for the period 236.4
--------------- ---------- --------
Total assets and liabilities
Sports Fashion Outdoor Unallocated Eliminations Total
GBPm GBPm GBPm GBPm GBPm
Total assets 1,446.4 257.3 - (77.5) 1,626.2
Total liabilities (667.6) (166.3) (35.5) 77.5 (791.9)
--------------- -------- ------------ ------------- -----------
Total segment net
assets / (liabilities) 778.8 91.0 (35.5) - 834.3
--------------- -------- ------------ ------------- -----------
Other segment information
Sports Fashion Outdoor Total
GBPm GBPm GBPm
Capital expenditure:
Software development 4.5 - 4.5
Property, plant and equipment 157.4 11.9 169.3
Non-current other assets 12.8 - 12.8
Depreciation, amortisation and impairments:
Depreciation and amortisation of
non-current assets 58.7 12.6 71.3
Impairment of intangible assets
(exceptional) 8.3 3.3 11.6
Impairment of non-current assets
(non-exceptional) 3.5 1.6 5.1
--------------- -------- ------
Geographical Information
The Group's operations are located in the UK, Australia,
Belgium, Canada, Denmark, Dubai, Finland, France, Germany, Hong
Kong, India, Italy, Malaysia, the Netherlands, New Zealand,
Portugal, Republic of Ireland, Singapore, South Korea, Spain and
the Canary Islands, Sweden, Thailand and the United States of
America.
The following table provides analysis of the Group's revenue by
geographical market, irrespective of the origin of the goods /
services:
2019 2018
GBPm GBPm
UK 2,137.9 2,058.7
Europe 1,368.6 939.9
United States 967.3 -
Rest of world 244.0 162.8
------------- -------------
4,717.8 3,161.4
------------- -------------
The revenue from any individual country, with the exception of
the UK & US, is not more than 10% of the Group's total
revenue.
The following is an analysis of the carrying amount of segmental
non-current assets by the geographical area in which the assets are
located:
2019 2018
GBPm GBPm
UK 391.6 362.1
Europe 323.3 260.8
United States 258.2 -
Rest of world 40.2 31.5
------------- -----------
1,013.3 654.4
------------- -----------
2. Exceptional items
52 weeks to 53 weeks to
2 February 3 February
2019 2018 GBPm
GBPm
Impairment of goodwill and fascia names
(1) 8.1 11.6
Movement in fair value of put and call
options (2) 5.6 1.3
Integration and consolidation of Outdoor 1.6 -
fascias (3)
----------------- -----------------
Administrative expenses - exceptional 15.3 12.9
Total exceptional items 15.3 12.9
----------------- -----------------
(1) The impairment in the current period relates to the
impairment of the goodwill arising in prior years on the
acquisition of Source Lab Limited, JD Sports Fashion South Korea
and the partial impairment of the goodwill arising in prior years
on the acquisition of Champion. The impairment in the previous
period related to the impairment of the fascia name arising on the
acquisition of Next Athleisure Pty Limited and JD Sports Fashion
SDN BHD and the goodwill arising in prior years on the acquisition
of Tiso Group Limited.
(2) Movement in the fair value of the liabilities in respect of
the put and call options.
(3) Costs arising from the integration and consolidation of the
principal IT systems, warehousing and other infrastructure in Go
Outdoors and Blacks.
Items that are, in aggregate, material in size and / or in
nature, are included within operating profit and disclosed
separately as exceptional items in the Consolidated Income
Statement. Exceptional items are disclosed separately as they are
not considered reflective of the year on year trading performance
of the Group.
3. Earnings per ordinary share
Basic and diluted earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share
at 2 February 2019 is based on the profit for the period
attributable to equity holders of the parent of GBP261.8 million
(2018: GBP231.9 million) and a weighted average number of ordinary
shares outstanding during the 52 week period ended 2 February 2019
of 973,233,160 (2018: 973,233,160).
52 weeks to 53 weeks
2 February to
2019 3 February
2018
Issued ordinary shares at beginning and
end of period 973,233,160 973,233,160
----------------- ---------------------
Adjusted basic and diluted earnings per ordinary share
Adjusted basic and diluted earnings per ordinary share have been
based on the profit for the period attributable to equity holders
of the parent for each financial period but excluding the post-tax
effect of certain exceptional items. The Directors consider that
this gives a more meaningful measure of the underlying performance
of the Group.
52 weeks 53 weeks
to to
2 February 3 February
Note 2019 2018
GBPm GBPm
Profit for the period attributable to
equity holders of the parent 261.8 231.9
Exceptional items excluding loss on disposal
of non-current assets 2 15.3 12.9
Tax relating to exceptional items (0.3) -
Profit for the period attributable to
equity holders of the parent excluding
exceptional items 276.8 244.8
----------------- ---------------------
Basic and diluted earnings per ordinary
share 26.90p 23.83p
----------------- ---------------------
Adjusted basic and diluted earnings per
ordinary share 28.44p 25.15p
------------ ------------
4. Acquisitions
Current period acquisitions
The Finish Line, Inc.
On 18 June 2018, the Group acquired 100% of the issued share
capital of The Finish Line, Inc. ('Finish Line') for cash
consideration of $558 million (GBP400.5 million).
Finish Line is one of the largest retailers of premium
multibranded athletic footwear, apparel and accessories in the
United States ('US'), the largest sportswear market in the world.
At acquisition, Finish Line traded from 556 Finish Line branded
retail stores across 44 US states and Puerto Rico in addition to a
well-established multichannel offering. Finish Line is also the
exclusive retailer of athletic shoes, both in-store and online for
Macy's, one of the US' premier retailers, operating 375 branded and
more than 150 small unbranded concessions within Macy's stores at
acquisition.
Included within the provisional fair value of the net
identifiable assets on acquisition is an intangible asset of
GBP70.6 million, representing the Finish Line fascia name. The
Board believes that the excess of consideration paid over the net
assets on acquisition of GBP98.5 million is best considered as
goodwill on acquisition representing future operating synergies.
The provisional goodwill calculation is summarised below:
Provisional
Measurement fair value
Book value adjustments at
GBPm GBPm 2 February
2019
GBPm
Acquiree's net assets at acquisition
date:
Intangible assets 16.9 70.6 87.5
Property, plant & equipment 76.5 4.9 81.4
Inventories 261.6 (5.8) 255.8
Cash and cash equivalents 50.9 - 50.9
Trade and other receivables 38.6 - 38.6
Income tax liabilities (1.5) - (1.5)
Deferred tax assets / (liabilities) 7.0 (11.5) (4.5)
Trade and other payables - current (135.9) (16.8) (152.7)
Trade and other payables - non-current (40.2) (13.3) (53.5)
Net identifiable assets 273.9 28.1 302.0
------------- -------------- --------------
Goodwill on acquisition 98.5
------------- -------------- --------------
Consideration paid - satisfied in
cash 400.5
------------- -------------- --------------
Included in the 52 week period ended 2 February 2019 is revenue
of GBP956.6 million and profit before tax of GBP24.6 million in
respect of The Finish Line Inc.
Choice Limited
On 13 August 2018, the Group acquired, via its subsidiary
Tessuti Limited, 100% of the issued share capital of Choice Limited
for cash consideration of GBP4.0 million and 8.8% of the issued
share capital of Tessuti Limited with a fair value of GBP1.3
million. Choice Limited operates as a retailer of premium fashion
apparel and footwear with six stores and a trading website at
acquisition. Included within the provisional fair value of the net
identifiable assets on acquisition is an intangible asset of GBP1.5
million, representing the Choice fascia name. The Board believes
that the excess of consideration paid over the net identifiable
assets on acquisition of GBP3.0 million is best considered as
goodwill representing future operating synergies.
Included in the 52 week period ended 2 February 2019 is revenue
of GBP11.6 million and profit before tax of GBP1.2 million in
respect of Choice Limited.
Other acquisitions
During the period, the Group made several small acquisitions,
these transactions were not material.
Full year impact of acquisitions
Had the acquisitions of the entities listed above been effected
at 4 February 2018, the revenue and profit before tax of the Group
for the 52 week period to 2 February 2019 would have been GBP5.2
billion and GBP318.8 million respectively.
Acquisition costs
Acquisition related costs amounting to GBP3.9 million (The
Finish Line Inc. GBP3.8 million, other acquisitions GBP0.1 million)
have been excluded from the consideration transferred and have been
recognised as an expense in the year, within administrative
expenses in the Consolidated Income Statement.
Prior period acquisitions
JD Sports Fashion South Korea Inc.
On 14 September 2017, the Group acquired an initial 15% of the
issued ordinary share capital of J&S Partners Inc. for cash
consideration of 8.1 billion South Korean Won (KRW). As part of the
joint venture agreement, the Group had a call option, exercisable
at the Group's discretion, to acquire a further 35% of the share
capital. This was exercised on 13 April 2018.
J&S Partners Inc. subsequently changed its company name to
JD Sports Fashion South Korea Inc. and at the date of acquisition
operated 24 multibranded Hot-T stores and a trading website. During
the current financial period 14 of the Hot-T stores have been
rebranded as JD stores. It is the Group's current intention to
re-fascia the remaining Hot-T stores as JD.
The period in which the call option could be exercised commenced
in October 2017. The Group has concluded, in accordance with IFRS
10, that the Group had 'deemed control' and therefore had the
ability to control the entity from the point at which the Group had
the right to exercise the option, being October 2017. The Group has
therefore included the results of the entity in the consolidated
financial statements of the Group from 14 September 2017.
The Board believed that the excess of cash consideration paid
over the net identifiable assets on acquisition of GBP2.9 million
is best considered as goodwill on acquisition representing
anticipated future operating synergies. The goodwill was
subsequently impaired in the financial period ended 2 February
2019. No measurement adjustments have been made to the fair values
during the 52 week period ended 2 February 2019. The period in
which measurement adjustments could be made has now closed on this
acquisition and the final goodwill calculation is summarised
below:
Measurement Fair value
Book value adjustments at
GBPm GBPm 2 February
2019
GBPm
Acquiree's net assets at acquisition
date:
Property, plant & equipment 4.8 (1.9) 2.9
Other non-current assets 13.9 - 13.9
Inventories 9.2 (0.4) 8.8
Trade and other receivables 0.5 - 0.5
Trade and other payables (3.5) - (3.5)
Interest bearing loans and borrowings (5.8) - (5.8)
Net identifiable assets 19.1 (2.3) 16.8
------------- -------------- -------------
Non-controlling interest (16.3) 2.0 (14.3)
Goodwill on acquisition 2.9
------------- -------------- -------------
Consideration paid - satisfied in
cash 5.4
------------- -------------- -------------
SDSR - Sports Division SR, S.A. ('Sport Zone Portugal')
On 31 January 2018, JD Sports Fashion Plc completed the
acquisition of Sport Zone Portugal resulting in the combination of
its existing interests across Iberia with those of Sport Zone in
Portugal, Spain and the Canary Islands.
The Group acquired, via its 50% subsidiary Iberian Sports Retail
Group SL, 100% of the issued share capital of SDSR - Sports
Division SR, S.A. ('Sport Zone Portugal') for initial net cash
consideration of GBP1.6 million and 30% of the issued share capital
in Iberian Sports Retail Group SL with a fair value of GBP61.1
million. Included within the 30% of the issued share capital was
the 24.95% of shares of Iberian Sports Retail Group SL that were
held in the Treasury Reserve.
Sport Zone Portugal owns 100% of the issued share capital of
Sport Zone Espana, Comercio de Articulos de Deporte S.A ('Sport
Zone Spain') and 60% of the issued share capital of Sport Zone
Canarias (SL) ('Sport Zone Canaries'). Sport Zone is a
well-established and leading multibranded sports retailer in
Portugal, with a presence in mainland Spain and the Canary Islands.
Sport Zone offers a multisport product range with a wide apparel,
footwear, accessories and equipment offering.
Included within the fair value of the net identifiable assets on
acquisition are intangible assets of GBP13.1 million; GBP9.2
million representing the 'Sport Zone' fascia name and GBP3.9
million of Sport Zone exclusive brands.
The Board believes that the excess of consideration paid over
the net assets on acquisition of GBP15.5 million is best considered
as goodwill on acquisition representing anticipated future
operating synergies. The fair value measurement adjustment to
inventories has been increased by GBP2.3 million and cash
consideration paid reduced by GBP1.5 million following the
finalisation of the acquisition accounting in the period to 2
February 2019. The period in which measurement adjustments could be
made has now closed on this acquisition and the final goodwill
calculation is summarised below:
Measurement Fair value
Book value adjustments at 2 February
GBPm GBPm 2019
GBPm
Acquiree's net assets at acquisition date:
Intangible assets - 13.1 13.1
Property, plant & equipment 39.7 (6.2) 33.5
Other non-current assets 1.2 - 1.2
Inventories 43.0 (4.3) 38.7
Cash and cash equivalents 4.8 - 4.8
Trade and other receivables 5.0 - 5.0
Income tax assets 0.2 - 0.2
Deferred tax assets / (liabilities) 5.3 (7.5) (2.2)
Trade and other payables - current (38.1) (1.9) (40.0)
Trade and other payables - non current (0.9) - (0.9)
Interest bearing loans and borrowings (6.9) - (6.9)
Net identifiable assets 53.3 (6.8) 46.5
------------- -------------- ----------------
Non-controlling interest (40% of Sport
Zone Canarias SL) (0.9) 0.1 (0.8)
Goodwill on acquisition 15.5
------------- -------------- ----------------
Consideration paid - satisfied in cash 0.1
Consideration paid - fair value of shares
in Iberian Sports Retail Group 61.1
------------- -------------- ----------------
Total consideration 61.2
------------- -------------- ----------------
Ben Dunne Gyms (UK) Limited
On 28 December 2017, the Group acquired, via its 87.5% owned
subsidiary JD Sports Gyms Limited, 100% of the issued ordinary
share capital of Ben Dunne Gyms (UK) Limited for cash consideration
of GBP1 assuming GBP2.0 million of net debt as part of the
transaction. Following the acquisition, the company name was
changed to JD Sports Gyms Acquisitions Limited. The Board believes
that the excess of cash consideration paid over the net
identifiable assets on acquisition of GBP1.0 million is best
considered as goodwill representing future operating synergies. No
measurement adjustments have been made to the fair values during
the 52 week period ended 2 February 2019 and the period in which
measurement adjustments could be made has now closed on this
acquisition.
Dantra Limited ('Kids Cavern')
On 1 February 2018, the Group acquired 75% of the issued
ordinary share capital of Dantra Limited for cash consideration of
GBP6.3 million. Dantra Limited trades under the fascia name Kids
Cavern from three stores and a trading website. The Board believes
that the excess of cash consideration paid over the net
identifiable assets on acquisition of GBP4.2 million is best
considered as goodwill representing future operating synergies. No
measurement adjustments have been made to the fair values during
the 52 week period ended 2 February 2019 and the period in which
measurement adjustments could be made has now closed on this
acquisition.
Other acquisitions
During the prior period, the Group made several small
acquisitions, including increasing its shareholding to 100% in two
subsidiaries which were previously non-wholly owned. These
transactions were not material.
5. Subsequent Events
Footasylum Plc ('Footasylum')
On 18 February 2019, JD Sports Fashion Plc acquired 19,579,964
Footasylum shares at prices between 50 pence and 75 pence per
share, representing 18.7% of the issued ordinary share capital.
On 18 March 2019, in conjunction with the board at Footasylum
Plc, JD Sports Fashion Plc announced the terms of an offer to be
made for the remaining 81.3% of the ordinary share capital of
Footasylum at a price of 82.5 pence per ordinary share. This offer
was declared unconditional in all respects on 12 April 2019 with
acceptances received for a total of 78,176,481 shares representing
a further 74.8% of the issued ordinary share capital.
Footasylum is a UK-based fashion retailer founded in 2005
focusing on the footwear and apparel market. The company operates a
multi-channel model which combines a store estate of 69 stores in a
variety of high street, mall and retail park locations in cities
and towns throughout Great Britain, with a strong online platform
and a recently launched wholesale arm for distributing its own
brand ranges via a network of partners.
The Board believes that Footasylum is a well-established
business with a strong reputation for lifestyle fashion and, with
its offering targeted at a slightly older consumer to JD's existing
offering, it is complementary to JD. The Board also believes that
there will be significant operational and strategic benefits from a
combination of the two businesses.
PG2019 Limited (Pretty Green)
On 4 April 2019, the Group acquired, via its 100% subsidiary
PG2019 Limited, the business and certain assets of Pretty Green
Limited (in administration), the boutique men's clothing brand,
from its administrator. The acquisition included the business,
brand and website as well as a flagship store in Manchester. Cash
consideration of GBP1.5 million was paid on completion with the
Group also assuming a further GBP1.8 million of debt.
Due to the proximity of the date of the acquisition and the date
of this announcement, it is not possible to present a provisional
goodwill calculation or the provisional fair values of the assets
and liabilities acquired. The provisional goodwill calculation and
fair value table will be presented in the announcement of our
Interim Results on the 10 September 2019.
6. Indicative Impact of IFRS16 'Leases'
The Group has assessed the impact that the application of IFRS16
has on its income statement for the period ended 2 February 2019
and on its balance sheet as at that date as shown below:
IFRS16 Indicative Impact on Income Statement for 52 Week Period
to 2 February 2019
IAS 17 Adjustment IFRS 16
GBPm GBPm GBPm
EBITDA 488.4 287.0 775.4
Depreciation (126.9) (235.1) (362.0)
-------- ----------- --------
Operating profit before
exceptional items 361.5 51.9 413.4
Exceptional items (15.3) - (15.3)
-------- ----------- --------
Operating profit 346.2 51.9 398.1
Net interest expense (6.3) (60.7) (67.0)
-------- ----------- --------
Profit before tax 339.9 (8.8) 331.1
-------- ----------- --------
IFRS16 Indicative Impact on Balance Sheet at 2 February 2019
IAS 17 Adjustment IFRS 16
GBPm GBPm GBPm
Right of use asset - 1,780.2 1,780.2
Total assets 2,205.5 (21.3) 2,184.2
Total liabilities (1,128.7) 134.0 (994.7)
Lease debt - (1,892.9) (1,892.9)
Net Assets 1,076.8 - 1,076.8
---------- ----------- ----------
7. Accounts
The financial information set out above does not constitute the
Group's statutory accounts for the 52 weeks ended 2 February 2019
or 53 weeks ended 3 February 2018 but is derived from those
accounts. Statutory accounts for the 53 weeks ended 3 February 2018
have been delivered to the Registrar of Companies, and those for
the 52 weeks to 2 February 2019 will be delivered in due course.
The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Copies of full accounts will be sent to shareholders in due
course. Additional copies will be available from JD Sports Fashion
Plc, Hollinsbrook Way, Pilsworth, Bury, Lancashire, BL9 8RR or
online at www.jdplc.com
Glossary (terms are listed in alphabetical order)
The Directors measure the performance of the Group based on a
range of financial measures, including measures not recognised by
EU-adopted IFRS. These alternative performance measures may not be
directly comparable with other companies' alternative performance
measures and the Directors do not intend these to be a substitute
for, or superior to, IFRS measures. The Directors believe that
these alternative performance measures assist in providing
additional useful information on the underlying performance of the
Group.
Alternative Performance Measures are also used to enhance the
comparability of information between reporting periods, by
adjusting for exceptional items. Exceptional items are disclosed
separately as they are not considered reflective of the year on
year trading performance of the Group. The separate reporting of
exceptional items, which are presented as exceptional within the
relevant category in the Consolidated Income Statement, helps
provide an indication of the Group's underlying business
performance.
Adjusted earnings per share
The calculation of basic earnings per share is detailed in Note
3. Adjusted basic earnings per ordinary share has been based on the
profit for the period attributable to equity holders of the parent
for each financial period but excluding the post-tax effect of
certain exceptional items. A reconciliation between basic earnings
per share and adjusted earnings per share is shown below:
2019 2018
Basic earnings per share 26.90p 23.83p
Exceptional items excluding loss on disposal
of non-current assets 1.57p 1.32p
Tax relating to exceptional items (0.03p) -
-------- -------------
Adjusted earnings per share 28.44p 25.15p
-------- -------------
Core
The Group's core Sports Fashion fascia is JD and the Group's
core market is the UK and Republic of Ireland.
EBITDA
Earnings before exceptional items, interest, tax, depreciation
and amortisation.
2019 2018
GBPm GBPm
Profit for the period 264.2 236.4
Addback:
Financial expenses 7.5 2.0
Income tax expense 75.7 58.1
Depreciation, amortisation and impairment
of non-current assets 126.9 76.4
Exceptional items 15.3 12.9
Deduct:
Financial income (1.2) (0.6)
------ ------
EBITDA 488.4 385.2
------ ------
LFL (Like for Like) sales
The percentage change in the year-on-year sales, removing the
impact of new store openings and closures in the current or
previous financial year.
Like for Like Sports Fashion businesses
The performance in the Sports Fashion segment excluding
acquisitions in the current financial year and the annualisation
period of businesses acquired in the previous financial year.
Operating profit before exceptional items
A reconciliation between operating profit and exceptional items
can be found in the Consolidated Income Statement.
Profit before tax and exceptional items (Headline profit)
A reconciliation between profit before tax and profit before tax
and exceptional items is as follows:
2019 2018
GBPm GBPm
Profit before tax 339.9 294.5
Exceptional items 15.3 12.9
------ ------
Profit before tax and exceptional items 355.2 307.4
------ ------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR IAMPTMBJBBPL
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