Teens helping JD beat slump with 24% leap

Teenagers either do not know or do not care there is a recession on.

That is the message from the figures at JD Sports Fashion, whose booming profits see it standing as a lonely beacon of prosperity on the High Street.

The group, which trades as JD and Size offering trainers and sportswear and also runs the Bank and Scotts fashion stores, reported a 24% surge in underlying pre-tax profits to £53 million in the year to the end of January. Like-for-like sales increased 3.9% for total revenues of £670 million and the gross profit margin was steady at 49.3%.

In addition to a rare retailer rise in the dividend, up 41% to 12p, JD says sales over the past nine weeks have continued to grow, up 0.3%, despite a tough comparative last year which included an earlier Easter holiday weekend.

"What's our secret? We have continued to differentiate, we are offering exclusive products and we have enhanced the appeal of our stores," said chief executive Peter Cowgill.

The demand to look different from JD's core 13-25 market will continue to drive sales, says Cowgill.

"Fashion and trainers are a matter of prioritisation for our customers," he said.

"There is peer pressure to look good and at that age they have maximum disposable income. We have also benefited from the closures of footwear stores on the High Street like Barratts and from the problems at JJB."

JD is often mocked for being a purveyor of chavwear but Cowgill appears to have no problem with the tag. "We take it on the chin," he said. "We satisfy a certain type of customer but we also appeal to quite a wide audience."

City analysts queued up to applaud Cowgill and JD. "Profit before tax came in well ahead of expectations and has not been achieved at the expense of margins," said Singer analyst Matthew McEachran, who is tipping the Bank fashion stores as a major opportunity for growth. "JD has made an encouraging start to the new financial year too.

"We estimate that, adjusting for the Easter distortion, the current run rate would be in the region of 2.5% growth in like-for-likes," it said.

"Overall these figures are excellent and should ripple through to more upgrades of the order of 6% to 7%.

It was not all good news, however. JD took more than £16 million of exceptional charges, including a £6.1 million writedown on its strategic 10% stake in JJB, as well as various one-off store and lease costs.

That made the bottom line £38 million, still up 9% on a comparative basis.