Ronnie’s future in question after JJB share transfer shock

THE FUTURE of Chris Ronnie, chief executive of struggling retailer JJB Sports, was under question today after his extraordinary admission that he no longer controls the 27% stake he bought in the company in 2007.

The former professional squash player teamed up with Icelandic investment company Exista in 2007 to buy the 27.5% stake held by former chairman Dave Whelan for £190m.

But it emerged last night that this stake is now in the hands of administrators to another Iceland institution, Kaupthing Bank. The situation only came to light after the company’s new executive chairman Sir David Jones asked a leading law firm to look at the ownership of the company.

A spokeswoman for JJB said the board had only been made aware of what had occurred yesterday afternoon and it was “too early” to discuss Mr Ronnie’s future.

One close watcher of the company told TheBusinessDesk this morning that the situation “beggars belief” and that it would be a surprise if he “lasts to the weekend.”

The City watchdog, The Financial Services Authority,  refused to comment on reports that it had launched an investigation into the matter. 

Mr Ronnie told the board yesterday that Guro Leisure, a company in which he has a 50% share had lost control of the JJB stake some time last year. He admitted too he did not know when or where this had taken place or the price of the shares at the time.

It now appears that Kaupthing had a call option on Mr Ronnie’s shares after he apparently used it has security for loans to Guro. Why no one knew about this arrangement is certain to warrant further investigation.

The source of the money used by Mr Ronnie to buy the Whelan stake has long been questioned, leading to frequent speculation – always firmly denied – that he had been bankrolled by close friend Mike Ashley, owner of Sports Direct, JJB’s biggest rival.

The value of the controversial shareholding has crumbled over the last 12 months, in line with the company’s share price.

Analysts believe that if Mr Ronnie was forced to step down, the day-to-day running of JJB would be handed to Peter Williams, the former Selfridges chief executive, who was appointed an executive director at the same time as Sir David’s elevation to the chairmanship two weeks ago. 

Mr Ronnie has spent most of his career in the sports retail business. Before joining JJB in June 2007, initially as deputy chief executive, he worked for Mr Ashley at Sports Direct.

He has also worked at Umbro and Sports Division, the retail chain owned by Sir Tom Hunter, before its sale to JJB in 1998.

Meanwhile in a trading update update today JJB said it was continuing to struggle. Like-for-like sales in the five weeks to January 11 are down 6.8% on last year.

JJB said it expects to post a loss before one off costs related to its financing of between £5m and £10m.

Executive chairman Sir David Jones said: “We have started a comprehensive review of the business…This is an essential part of the plan to re-establish JJB as a major force in the sportswear market.

“We are under no illusions that this is a very difficult task in the present retail environment, but we are determined to succeed.”

Shares were down 23.6% at 10.5p today.

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