JJB Sports, the sportswear retailer, posted a 14 per cent rise in full-year profits today but gave warning that the England football team's lacklustre performance in the qualifying competition for Euro 2008 could hit the group if the national team fails to make it to the finals.

The Wigan-based group reported pre-tax profits of £38.5 million for the year to January 28, 2007.

Profits were hit by a £4.1 million provision against an £8 million fine from the Office of Fair Trading for fixing the price of football shirts.

The company had previously paid £3.9 million of the penalty.

JJB also took a £3.3 million charge related to the closure of its Icon stand-alone stores.

Sales of replica England and Manchester United shirts helped to lift revenues 8.7 per cent to £810.3 million.

The figures were ahead of analyst forecasts.

Shares in JJB were up 4p, or 1.5 per cent, at 264p in early trading, valuing the business at about £620 million.

The stock has gained about 30 per cent over the past year.

JJB added that it was seeing some improvement in margins, which had come under pressure amid price competition with SportsWorld, the rival sports retailer owned by the recently floated Sports Direct.

Sales in the first nine weeks of the current financial year were up 3.2 per cent compared with the same period a year ago. Margins were up 2.5 per cent.

JJB has sought to differentiate itselft from SportsWorld by positioning itself as an upmarket alternative and by devoting stores to the adidas and Nike brands.

Tom Knight, chief executive at JJB, said: "When you go into Sports Direct you don't get the feeling that they are serious about sport. We are not a discount-led retailer."

However, he also gave warning that the company would suffer if England failed to reach the Euro 2008 finals, which will take place in Austria and Switzerland next year.

He said: “We would have to look at numbers if England failed to qualify ... that would be very damaging to our business.”

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The company said that a dividend of 7p a share will be paid, unchanged from last year.

The payout will benefit Dave Whelan, the JJB founder, who owns 30 per cent of the group, to the tune of £5 million.

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