Inside the outdoor industry

Go Outdoors struggles as JD Sports group thrives

314

JD Sports has released its half-year results, with revenue and operating profit significantly increased, but the outdoor offering oversahdowed by ongoing travails at Go Outdoors.

The half-year report for the 26 weeks ending August 3, the retailer saw revenue surge 47 per cent year-on-year to £2.7 billion – driven by a 10 per cent jump in like-for-like sales across the UK and Ireland stores.

The sports retail giant – which operates the flagship JD Sports chain and Finish Line in the UK and abroad, along with Tessuti, Blacks, Go Outdoors and several others – also saw EBITDA more than double from £171.8 million to £402.9 million.

Operating profit rose 61 per cent year-on-year to £199.8 million, and pre-tax profit increased 6.6 per cent to £129.9 million.

However, on underlying basis EBITDA increased by 37 per cent year-on-year to £235.2 million and profit before tax and exceptional items increased 36 per cent to £166.2 million.

In a statement about its outdoor business, the firm said: “This has been another challenging period for our Outdoor businesses overall and, whilst we are pleased with the positive trading and improved result in the Blacks and Tiso businesses, these gains have been overshadowed by a significant loss in the larger Go Outdoors business.

“The Go Outdoors business has historically worked with a store replenishment model where branded suppliers delivered goods direct to store. We believed that this model resulted in an inflexible supply chain with weak product availability in stores at times of high consumer demand and that the stores would therefore be better served, and the consumer experience enhanced, with a central warehousing model for stock combined with a migration onto the Group’s IT platforms, leveraging from JD’s highly successful replenishment methodologies. We took possession of a 353,000 sqft facility in Middlewich, Cheshire in February with replenishment commencing from this facility, which is operated by a third party, at the end of April. Fulfilment of online orders has also now been transferred to this site.

“There were a number of initial challenges arising from the execution of this change which had a significant impact on availability, replenishment to stores and online fulfilment in the key trading period of May and June. We have now resolved many of the issues and are more widely reassured over the longer term potential for Go Outdoors after the business delivered like for like sales growth in July.

“We maintain our belief that this new flexible supply chain model, where we have greater control over the replenishment, will bring longer term financial benefits to Go Outdoors. Furthermore, we remain convinced that greater integration of the Outdoor businesses, with Blacks and Go Outdoors having access to one pool of stock with common merchandising systems will also provide the most robust and effective platform for the long term development of our Outdoor businesses. However, we believe it is prudent to allow time for operations in the new facility to further stabilise and so we have delayed the transfer of the Blacks stocks from Kingsway to Middlewich until early 2020.”

Comments are closed.