JD Sports Fashion plc, which can be simply called as JD Sports, is a sports and fashion retail corporate based in United Kingdom, while it is listed on the London Stock Exchange, and also it is one of the FTSE 250 Index’s constituents. The main business of JD Sports is to sale the fashion apparel sport and footwear, while a lot of limited edition and exclusive designs from Adidas and Nike are soled JD Sports, and a typical JD Sports Store is as the following photo.
Chart 1 Panoramic View of Chausport Store
Sources: The picture is gathered from the home page of Chausport, which can be found from http://www.chausport.com/
In 2008, the consumers had spent an estimated £1.28 billion[①] on sports footwear and £3.25 billion on sports clothing; In the same period, the total revenue of JD Sports is £0.67 billion, hence the JD Sports had taken 14.79% market shares in the sports clothing and sports footwear market, which is relatively high in the retail industry. There are two main rivals in the sports clothing and sports footwear retail industry for JD Sports: JJB and Sports Direct International. In 2008, JJB generated total revenue with £0.65 billion; hence the total market share for JJB is 14.35%, which is a little lower than JD Sports. In the same period, Sports Direct International achieved revenues of £1.37 billion from United Kingdom Markets, while the total market share for Sports Direct International is 30.24%. The relative ratios for these three companies are described in the following chart, while the revenues data for each company are gathered from “Sports Clothing and Footwear Market Report 2009”, which can be downloaded from http://www.researchandmarkets.com/reports/1055027. Until the close of 2009, there are 1,178 sports fascias stores and 261 fashion fascias stores totally, where there are a total of 67 stores opened and a further 94 stores refurbished over the last three years. The gross profit of JD Sports for 2010 is 49.3%, which is just the same with year 2009, and it indicates that JD Sports still had a high increasing rate; while the profit before tax in year 2010 is £61.39 million, increasing by 61% compared with the same period of year 2009, which indicates that the JD Sports still hold a high performance of profit①.
Chart 2 the pie chart for the main companies
in the sports fashion and footwear retail industry of UK
Source: The revenues data for each company are gathered from “Sports Clothing and Footwear Market Report 2009”, which can be downloaded from http://www.researchandmarkets.com/reports/1055027.
As is known that, in the development process of a company, its financial performance will change with the scale or size of the main business, which can be found from the values of the key financial performance and the changes of some key financial indicators, hence this paper will explore the key financial performance of JD Sports to see whether the financial situation of JD Sports is still healthy. Key Financial Performance
First, the revenue, net debt/ cash, and profit before tax and exceptional items between 2006 and 2009 are gathered and histogram charts for them are listed below. The company had experienced a rapid development since 2006. The revenue had increased by 57% between 2006 and 2009, while the average increase rate for each year is 12.80%, which indicates that the market share of JD Sports is increasing each year, hence the source of profit can be agreed. The net(debt)/cash had increased ￡60.5 million, while the average increase rate for each year is 20.77%, which indicates that the cash flow for JD Sports is becoming better and better in these years and the debt risk is not so good for JD Sports (John, 1966). In the end, the profit before tax and exceptional items also increased greatly from ￡16.6 million to ￡67.4 million, while the average increase rate for each year is 43.34%, and the rate shows a high profit...