JJB in fitness focus as retail shops' profits slump

Leisure Report, May, 2008

JJB Sports, the sportswear retailer and leisure centre operator, has released its year-end results for 2007.

For the period ending 27 January 2008, the company reported an adjusted operating profit of 34.3m [pounds sterling], down 28.2% from 47.7m [pounds sterling] in 2006. This was despite a slight rise in turnover to 811.8m [pounds sterling], up 0.2% from 810.3m [pounds sterling] in 2006.

Inflated sales figures on the back of the 2006 FIFA World Cup were unmatched by a major tournament in 2007 hitting the company's retail division particularly hard. Its revenue slid 1.2%, from 754,488 [pounds sterling] in 2006 to 745,472 [pounds sterling] in 2007, while adjusted operating profit fell from 60,275 [pounds sterling] to 49,435 [pounds sterling], an 18% change. The company said it was searching for ways to be less dependent on biannual football tournaments, especially given the failure of British national teams to qualify for the 2008 European Cup finals.

However, JJB's fitness centre division performed strongly. For the year, it delivered revenue of 66,280 [pounds sterling] (up 18.8% from 55,799 [pounds sterling]) and adjusted profit of 17,112 [pounds sterling], up 15.8% from 14,776 [pounds sterling] in 2006.

In 2007, JJB augmented its 39-outlet fitness centre operation with the addition of 10 new units, including nine combined with superstores and one stand-alone unit purchased from leisure centre operator Fitness First. The strong performance of the division was underlined by a 3.4%t like-for-like increase in gym memberships, JJB said.

The company plans to open another 10 combined fitness centre/superstores in 2008. It will also complete its 25m [pounds sterling] disposal of retail units, which will see 72 shops shut by the end of April, with the projected loss of up to 800 positions. Seven shops will be rebranded The Original Shoe Company, a chain JJB purchased in January 2008.

Company chairman Roger Lane-Smith said: "Whilst we expect current difficult market conditions to continue to affect consumers in the short term, we believe the action we are taking represents a turning point for the Company, which will benefit performance over the medium-term."

In addition, JJB reported that during its pre-Easter trading, which includes the seven weeks to 16 March, total revenue was down 3.5% year-on-year, including a 3% fall in like-for-like revenue from units older than 52 weeks. JJB Sports shares fell 2p, or 1.8% following the announcement.

Earlier last month, JJB Fitness Clubs announced that, following a skills analysis through the government's Train to Gain scheme, it had teamed up with Trafford College and Lifetime to deliver training programmes to its employees on the scheme and deliver a proportion of the Learning and Skills Council (LSC) funded training.

Lifetime will provide Fitness, Customer Service and Sales training at Level 2 and the programmes are planned to be delivered at 22 of the 48 JJB sites across the UK.

Train to Gain brings great opportunities for operators, giving them the chance to provide high quality and affordable training for its employees, says Gerwyn House, Director of Operations at Lifetime. "By working with Trafford college it enables two recognised and leading quality training providers to get together to provide provide industry-recognised training programmes with efficiency and flexibility. JJB clearly recognises the value of work-based learning and Train to Gain is a positive step towards supporting their investment in staff training."