JJB shares dive as sales slow
SHARES in retailer JJB Sports have fallen 12% after the firm reported a slowdown in sales.
This came despite the Wigan company revealed a 10% hike in half-year sales and cut its losses.
Investors took fright as JJB said: “There appears to be increasing caution in the market over discretionary expenditure.” At one stage the stock was trading 12% down, but later recoverd to 10.25p, down 6.82%
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The company, which narrowly avoided insolvency last year, saw turnover rise from £167.3m to £184m in the 26 weeks to August 1.
It nearly halved its pre-tax loss during the period from £42.8m to £23.9m.
Like-for-like retail revenue rose by 14.4% and the gross margin grew by 8.2%. But chief executive Keith Jones warned that sales have been “volatile” since August 1 and the full-year figures depend on the performance in the run up to Christmas and during January.
The company said the trading environment was getting tougher as consumers braced themselves for VAT rises and public spending cuts.
Mr Jones added: “We have consequently taken further steps to drive autumn and peak season sales through increased promotional activity.
“This is with the continuing strong support of key supplier partners and our bankers [Bank of Scotland], who have agreed that the EBITDAR covenant will not be tested in October to provide us with the flexibility to implement our plans.”
The group’s previous financial problems left it struggling to get hold of new stock but it said today that both the quantity and quality of supplies has increased since last year. More than 60% of stock is now less than three months old.
It also expects to boost performance by refurbishing shops. A trial in Slough delivered a performance ahead of the rest of the group and five more are planned before the end of October.
The World Cup produced a positive sales performance in line with expectations, albeit suppressed by England’s exit before the quarter-finals. Compared with the previous World Cup in 2006, sales were 13% up on a like-for-like basis.
JJB said it had added a former Co-operative Group executive to its operating board. Debbie Robinson joins the firm as marketing director from the Co-op where she was director of food marketing.
