Profitability Indicator Ratios: Profit Margin Analysis - Assignment Example

Today the company now has over 900 stores worldwide which cater to wide demography of customers across the globe. The company was founded by the name of John David stores in 1981 with one shop in bury. In the financial year of 1989, the first London store was opened in Oxford Street.

One of the most important landmarks in the history of the company was the floatation of its equity stock in the year 1996. At this point in time, the company had around 56 stores. Subsequent to the issuance of equity in the market, the revenue growth of the company started increasing at a rapid pace. The company acquired affiliations with international sports brands such as Addidas, Nike, and Reebok, and thus it was able to establish a substantial presence in the retail industry. The company not only focused on organic growth but also expanded through mergers and acquisitions.

In the financial year 2002, JD sports acquired nearly 200 stores, and the highlight among them was the acquisition of the first sport, a renowned sports retailer. In the financial year 2005, the company was also able to purchase more than 70 stores from All stores which further established its position as the leading UK retailer in sportswear merchandise. The primary operations of the company reside in the UK, Ireland, and France. 1.2 Overview of the current operations In the financial year 2012, the company acquired Blacks, another leading sports retailer in the industry.

With the acquisition of Blacks, the JD group comprises four divisions being Sports Fascias, Fashion Fascias, Outdoor, and Distribution. The current primary business of the company is retail and the other businesses of the company act as support activities. JD Sports have made a substantial investment in brands, business, multi-channel and other infrastructure to improve and enhance the financial outlook of the company. The company has also made a substantial investment in the current year for expanding its business to greater horizons such as Spain, Ireland, and France.

The company was able to open its first store in Spain in March 2012. The following is a brief financial analysis of various operating segments of the company: 1.3 Sports Fascias The Sports Fascias of JD sports plc comprises JD, Size, Chausport, Sprinter, and Champion sports. During the financial year of 2012, the revenue of the company increased by 16.3% and its market share also hiked as compared to the prior years. The gross margin of the company, however, experienced a marginal decrease from 51% (2011) to 50.8% (2012). This decrease was primarily due to the lower margin business of Champion and Sprinter.

The operating profit of the segment experienced a hike of about ? 1 million. 1.4 Fashion Fascias The fashion fascias comprises Bank, Scotts, and Cecil Gee. During the current financial year, the total revenue of the company increased by 13.2% and the gross margin of the segment decreased marginally from 49% to 48.5%. 1.5 Outdoor After the acquisition of Blacks, a new reporting segment by the name of Outdoor has been created. At the time of the acquisition, the operations of Blacks were in an adverse position and it required considerable efforts and time of the management to bring them to a reasonable position.