JD Sports has reported a 1.1% increase in like-for-likes for the first half but, as it advised at its last results, the sportswear retailer’s operating profit was dragged down by a £10m loss at the newly-acquired Blacks business.

Sales rose 26.4% in the first half to July 28 to £556m. Executive chairman Peter Cowgill said that trading in its sport fascias had been “robust” since the period ended but its fashion business had been “more difficult”.

Excluding the Blacks loss, operating profit was £13.2m after JD made a profit of £18.9m from its sports fascias and suffered a £5.3m loss at its fashion fascias. Its distribution business made a loss of £400,000, compared to a loss of £500,000 the previous year.

JD Sports said that it had taken the initial £10m loss from Blacks as a result of a “critical lack of stock and unsustainable cost base” following its acquisition from administration. The majority of the loss was incurred in the first three months.

Group pre-tax in the period fell to £2.9m from £20.1m in the first half.

Like-for-likes at JD’s sports division rose 1.2% in the period and fashion edged up 0.7%.

The retailer reported: “The further reduction in operating profit has arisen principally from the phasing of earnings streams from new acquisitions and acquisitions made in the prior year, together with duplicate and excess warehouse operating costs incurred in the transition to the centralised Kingsway warehouse which is now fully operational.”

Group gross margin increased from 48% to 48.4% because of to a strong margin at Blacks business together with improvements in margin at its distribution businesses. JD said the Blacks business was “stabilising”.

The retailer said its expansion in Europe continues. It now has seven stores trading in France and three opened in Spain during the period.

Cowgill said: “I stated in April that the recent expansion activity in the group, the relocation of distribution facilities and the resolution of the stock and property issues in the Blacks business would impact results in the short term. As expected, this has proven to be the case but it does provide the group with a very positive platform for future development.

“The robust trading in the sports fascias has continued since the period end although trading in the fashion fascias has been more difficult. Our outdoor business continues to stabilise and aims to break even in the second half before any restructuring charges.”

He added: “As ever, the group result for the full year remains very dependent on the sales and margin performance in December and January. Notwithstanding the economic pressure on margin and the general increase in taxation and other levies across Europe, the board believes that the group is well positioned to deliver results that are within the range of current expectations.”