JJB warns recovery ‘won’t be easy’
STRUGGLING sportswear retailer JJB has posted an expected heavy loss and warned its recovery will not be “quick or easy”.
The retailer narrowly avoided administration last year by going through a CVA, selling its gyms business and raising £100m through a rights issue.
In the 53 weeks to January 31 revenue fell 42% to £372.4m from £647.7m. The Wigan-based group said its underlying pre-tax loss for the period was £68.5m, compared with £21.8m last time.
After taking into account exceptional items the group cut net losses from £170.2m to £68.6m.
Chief executive Keith Jones described 2009 as the most difficult in the company’s history. He said: “We cannot pretend that the company’s recovery will be either quick or easy. There is an enormous amount of work to be done to introduce modern retail standards and disciplines into the business. The early signs are encouraging however, including a steady improvement in our like-for-like sales.”
He added: “We operate in an attractive market, estimated to be worth over £5bn and I am confident that, over time and with commitment from our staff, JJB can recover to become the UK’s leading specialist sports retailer.”
Revenue from ongoing retail operations fell by £105.5m to £361.1m, or 22%. The company said this reflected stock problems and the loss of a quarter of its retail space following the sale of the gyms division and the administration of the Original Shoe Company and Qube Footwear. The business now operates from 250 shops covering 2.7m Sq ft, down by 0.9m sq ft.
The gross margin from retail declined from 47.3% to 34% as stock was cleared of “inappropriate ranges” and turned into cash. Since the end of the first half stocks have been rebuilt but JJB said it has been restricted by long product lead times and ongoing financial concerns.
A trading update covering the 16 weeks to May 23 was also published today. It showed revenue 7.5% higher and up 19% in May. Gross margins have improved by 6.8 percentage points to 43.6% and the company has net cash of £5.6m.
The company is working with suppliers to improve its product range and stock availability, and plans to have a wider selection of exclusive and own label products. It has already received its World Cup and seasonal merchandise.
The business said it will undertake a complete review of its stores and will refurbish test stores in the summer. The website is being revamped and will be linked to JJB’s retail stock systems. this should be finalised later in the year.
Shares in JJB, which have lost 38% of their value over the last six months, closed on Wednesday at 19p, valuing the business at £124m.
