JD Sports optimistic on turnaround at Blacks, Millets

* H1 profit 10 mln stg vs 2.9 mln stg in 2012

* Sports retail sales up 7.5 pct, fashion down 2.2 pct

* Sees outdoor business breaking even in H2

* Says on target to meet market expectations

By Neil Maidment

LONDON, Sept 18 (Reuters) - JD Sports Fashion (LSE: JD.L - news) is confident of turning round its fashion and outdoor businesses Blacks and Millets after the clothing and footwear retailer's first-half profits surged on the back of strong demand at its sports stores.

Healthy sales of the latest footwear from upmarket brands like Adidas (LSE: 0OLD.L - news) and Nike (NYSE: NKE - news) helped JD Sports profit before tax and exceptional items for the six months to Aug. 3 rise to 10 million pounds ($16 million) from 2.9 million a year ago.

Like-for-like sales in the company's main UK and Ireland sports retail arm rose 7.5 percent in the half year, benefiting in-part from the demise of rival JJB Sports. This has left JD Sports and market-leader Sports Direct as Britain's dominant sportswear outlets.

That performance helped offset a 2.2 fall at the firm's smaller Bank and Scotts fashion arm as well as the impact of lower margins at outdoor brands Blacks and Millets following heavy discounting to clear winter stock.

JD Sports bought its loss-making Blacks and Millets outdoor chains from administrators for 20 million pounds in January 2012. Since then, the group has hired new management, refurbished stores and relocated warehouse operations ahead of the key autumn and winter trading period.

"You don't buy anything in distress normally that isn't just that. So where do we feel we are now? We feel we are getting stronger, in football parlance terms we're coming up the league," Chairman Peter Cowgill told Reuters on Wednesday.

Operating losses at Blacks and Millets improved slightly to 8.9 million pounds in the period, and Cowgill said he expected the division to break even in the second half.

At its fashion arm, where operating losses increased slightly to 6.9 million pounds, the group is focused on improving its Banks business. It has appointed Gwynn Milligan, formerly of fashion retailers Arcadia and ASOS (Other OTC: ASOMY - news) , as managing director to revitalise its product range.

JD, which has most of its roughly 900 stores in Britain, also wants more stores overseas and has opened in France, Ireland (Other OTC: IRLD - news) and Spain through acquisitions in the past few years. The firm bought 15 stores in the Netherlands and 10 in Germany in the half year. It will add six stores to its 12 in France, and two more to its six in Spain in the second half.

The group said like-for-like sales for the main UK and Ireland sport and fashion chains in the five week period to Sept. 7 were up by 2.8 percent. It said it was confident of delivering full-year results within current expectations.

JD Sports, whose shares were flat at 1025 pence at 0805 GMT, is on average expected to post a full-year pretax profit of 68.7 million pounds according to a Reuters poll. ($1 = 0.6288 British pounds)