JJB’s rapid and painful fall from grace
JJB SPORTS’ demise has been rapid and painful for investors, landlords and of course its home town of Wigan.
While more than 2,200 job losses were announced on Monday as administration was finally confirmed, it is thought that the job losses toll is actually much higher as the company had been closing stores in the weeks leading up to its eventual end game – on July 30, JJB said it had more than 180 stores and 4,000 staff.
Just five years ago it had 400 shops and was a solid, if not spectacular performer on the high street and stock market. It had successfully launched a health clubs business which grew quickly to a chain of 40.
The turning point was the sale and exit in 2007 by longstanding chairman and shareholder Dave Whelan, who bought one shop in Wigan in 1971 and built the business up.
Thereafter with few exceptions it was all downhill as the recession, tough competition from Sports Direct and JD Sports Fashion, and ill-judged and costly strategic decisions such as the acquisition of fashion and footwear businesses Qube and Original Shoe Company, laid JJB low.
In the last two years the company’s retail estate more than halved as under-performing stores were jettisoned in two CVA deals with landlords.
Institutional shareholders such as the Bill and Melinda Gates Foundation supported several multi-million cash calls as management sought to revive the retail offer with a greater emphasis on sports equipment.
Just four months ago it secured another lifeline – £20m from US retailer Dick’s Sporting Goods and a further £10m from existing shareholders plus support from key suppliers Nike and Adidas.
Sadly, yet another slump in trading this summer saw Dick’s take fright soon after and withdraw support, effectively leaving JJB high and dry and with nowhere else to turn.
