JJB posts half year loss of £43m
SLIMMED-down and starved of stock, retailer JJB Sports today revealed a £42.9m loss and a plunge in sales after a traumatic period which saw it narrowly avoid administration.
The Wigan retailer said sales in the six months to July 26 had fallen 21.3% to £167.3m, as a result of stock shortages and store closures. On the issue of stock, the company, which operates 246 stores nationwide, said there would not be major improvement in its position until next year.
The half year report reveals that JJB paid more than £11m in professional fees as it fought back from near-collapse.
The company said it had also cut head office costs by 45% and taken 16% of the workforce out of its warehousing function in Wigan, but did not give a figure on the number of job losses.
Sir David Jones, the former Next supremo now leading JJB said: “In the first half of 2009 we were on the brink of going into administration but thanks to a lot of hard work and original thinking by the new management team and our advisers we are in the process of implementing a restructuring and refinancing plan to provide a platform from which to secure the longer term future of the group.”
Outlining the measures taken to save the business he highlighted: the placing of the loss-making lifestyle businesses Original Shoe Company and Qube into administration; the £80m sale of the fitness clubs to Dave Whelan Sports; and most importantly the CVA, which saw the landlords of approximately 140 closed stores agreed to a deal on the rent they were owed as being key to the company’s survival.
JJB said it had agreed a further £10m of new financing with the Bank of Scotland and improved financial covenants, which would give it further head-room in the coming months.
Sir David added: “Although the retail environment remains challenging, we are encouraged by the early signs of improvement in like-for-like sales trends and gross margins in recent weeks.”
Like-for-like sales for the four weeks to August 23 were down 37%, while for the following four weeks they were down 28%.
Rarely out of the spotlight this year, Sir David had been embroiled in a bitter personal dispute with former chief executive Chris Ronnie, who departed the company in March.
Earlier this month JJBs blew the whistle on rival Sports Direct, reporting it to regulators for alleged price-fixing. The Office of Fair Trading (OFT) and the Serious Fraud Office are both investigating.
In relation to the Serious Fraud Office probe, JJB said: “The company has contacted the SFO directly and the SFO has confirmed that its investigation is focused on the activities of certain individuals rather than the company.”
Sir David also warned trading is unlikely to improve over the next few months: “We remain extremely cautious about the remainder of the financial year.
“We are unlikely to see a significant improvement in stock levels or quality before the beginning of 2010 and it will not be until 2010/11 that we see any consequent improvement in JJB’s performance,” he said.
