Sportswear firm JJB Sports yesterday posted a 45 per cent fall in profits as a vicious price war on the high street took its toll.

The Wigan-based company said falling sales and heavy discounting at its 438 stores sent operating profits tumbling from #62.1 million to #34.3 million in the year to January 29.

The "disappointing" result was in line with revised City expectations and came after a string of profits warnings as JJB suffered at the hands of rivals such as Sports World.

Chief executive Tom Knight said a shift was under way in Britain's sport retail market, with prices likely to be driven down further.

"We are anticipating this lowering of margins could go on for years; this isn't just a blip, if this is Sports World's continuing model and that's the way it's going to be, then that's the way it's going to be," he cautioned.

Sports World, owner of the Sports Soccer chain and London store Lillywhites, is expanding aggressively, with a new UK branch opening every week this year.

It is selling adult Umbro England soccer shirts for #25 compared with #40 just two and a half years ago, when both it and JJB were fined for price fixing.

JJB, whose founder and biggest shareholder David Whelan, owner of Wigan Athletic FC, has a 39 per cent stake in the company, said Easter provided an upturn in sales in the 11 weeks to April 16 but warned that further aggressive price cuts meant that margins were down.

Chairman Roger LaneSmith said: "The board does not anticipate any significant improvement in trading conditions during the current year."

But he added that the company was "hopeful" it would benefit from increased sales of replica football shirts as a result of this summer's World Cup in Germany. The firm has also signed a ten-year licensing deal with Rangers FC worth an initial #18 million to design and sell Rangers merchandise throughout its stores, while a deal with Everton FC has been extended.

Like-for-like sales fell 4.3 per cent last year as total revenues dropped from #773.3 million to #745.2 million.

It came amid "very competitive" trading conditions which saw JJB struggle to match replica kit sales achieved during Euro 2004. Heavy discounting from October last year improved sales but hit margins. Mr Lane-Smith said: "Although not unexpected, the fall in the full year profits is disappointing.

"As well as a generally difficult retail climate, the sports sub-sector is also going through fundamental change with competitive pressures making trading conditions extremely challenging.

"To offset this we have adopted a more aggressive stance on pricing with a resultant pressure on margin." JJB operates from 194 out-of-town superstores, 109 large high street stores and 135 smaller shops including four specialising in golf.

It also has 32 health clubs, including six indoor football centres, where turnover increased by 42 per cent to #89.2 million last year thanks to expansion which saw membership grow from 88,400 to 136,800.