JJB Sports has hailed “steady progress” in its turnaround after cutting losses and fattening margins in its first half.
However the retailer also warned that trading conditions are extremely volatile, like-for-likes have slowed since the half-year and strong promotions will be essential to convince consumers to spend.
JJB Sports chief executive Keith Jones, who joined in March to lead a three-year turnaround, reported that the adjusted operating loss from ongoing retail operations was cut from £42.5m to £22.5m in the six months to August 1, when sales rose 10% to £184m.
Like-for-likes leaped 14.4% and a new model store at Slough outperformed the group average. Gross margin improved from 34% to 42.2% although it was hit by the need to reduce overstocks on orders placed at the end of last year.
However comparable sales growth, which climbed to 18% during August, which included a bank holiday promotion and Sale, has since slowed to 6%.
In expectation of the need for continued promotions the retailer has agreed with lender Bank of Scotland that its EBITDAR convenant will not now be tested in October, as originally scheduled.
The retailer ran “a Spend” in September and “Save” in October promotional campaign. Jones said: “This demonstrates that sales performance has responded positively to certain promotional activities but in the current climate falls back without effective stimulation.”
Jones maintained: “In the short term our new sales management and promotional activities will drive performance to year-end. We now have the senior management team in place to develop plans and initiatives to deliver the next phase of recovery.
“Although there remains much to be done, I remain excited by the size and nature of the opportunity for the business and confident in management’s ability to deliver that opportunity”.
JJB has appointed Debbie Robinson as marketing director. She was formerly with the Cooperative Group where she created the ‘Good with food’ campaign.