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JJB Sports reports deeper losses

JJB Sports reported a pre-tax loss of £42.9m for the first half of 2009, blaming stock shortages during the period.

The loss is considerably deeper than in the same period last year when it stood at £14.8m.

JJB Sports said sales over the 26 weeks to July 26 were down 42.5% at £178.6m.

Current trading showed a marginal improvement with like-for-like sales for the four weeks to August 23 down 37%, and comparable sales for the four weeks afterwards down 28%.

JJB chairman Sir David Jones said: “What we have achieved to date and the volume of work which remains to be done is a reminder of the state of financial health in which the company found itself at the start of the year.”

“Today’s announcement shows a marked decline in ongoing retail operations compared to the same period last year largely because of stock shortages in our stores during the period. We are confident that the actions we have taken during the period to restructure the business will allow us to move forward and rebuild our stock inventory by the first quarter of 2010. 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.”

JJB Sports and rival Sports Direct are being investigated by the Serious Fraud Office [SFO] over a suspected sports retail cartel.

Jones said the directors did not believe that the company had committed any offences under the Fraud Act for which it would be prosecuted given its leniency status and that the directors considered the company had been the victim of certain other offences.

He added that the SFO has confirmed that its investigation is focused on the activities of certain individuals rather than the company.

In the half year, the retailer has disposed of its Fitness Clubs business to Dave Whelan, placed Original Shoe Company and Qube into administration, carried out a successful CVA, and arranged new financing with the Bank of Scotland.

Jones said: “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.”

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