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JJB Sports warns "no quick fix"

Like-for-like sales at JJB Sports dropped 23.3% for the 16 weeks to May 17 and total sales fell 42.1% over the period, after the retailer was struck by severe stock shortages.

The like for like total was made up of a 25.8% drop in sales at JJB stores and a 7.1% increase at the fitness clubs, which were sold to JJB founder Dave Whelan in March.

Gross margin was 580 basis points lower than the same period last year.

“These two diversions from the product policy of the founder of the business, Dave Whelan, affected staff morale and caused confusion, particularly within the company’s buying departments.”

Sir David Jones, executive chairman, JJB Sports

JJB Sports also issued unaudited preliminary results this morning which showed the business had racked up pre-tax losses of £189.2 million for the 52 weeks to January 25 against a £10.8m profit the previous year. Like-for-like sales over the year dropped 6.9% and total sales were down 13.4% to £718.3m.

JJB Sports blamed the poor performance on the reluctance of many suppliers to deal with the business because of a lack of credit insurance and negative publicity surrounding the chain. The result was that JJB Sports suffered from significantly lower levels of stock over the last nine months.

JJB said it did not anticipate any improvement in sales until the fourth quarter of 2009, because of lead times of up to six months to get new product in store.

JJB Sports successfully negotiated a Company Voluntary Agreement which is expected to be implemented on May 28, with JJB’s  new finance arrangements expected to become available on June 1.

Sir David Jones slams previous management

JJB chairman Sir David Jones issued a statement slamming the sportswear chain’s previous management which he said had made, “a series of bad decisions”. He added that the decision by former chief executive Chris Ronnie to pursue a discount strategy and to take on JD Sports Fashion by buying Qube and Original Shoe Company, had severely demoralised staff and that on top of the worsening economic environment this had brought the company dangerously close to insolvency.

Jones’ statement said: “These two diversions from the product policy of the founder of the business, Dave Whelan, affected staff morale and caused confusion, particularly within the company’s buying departments, the retail stores, and most importantly JJB Sports’ customers, with  inevitable result of falling sales.”

Jones said that putting JJB Sports back on track was the biggest challenge that he had ever had, but said he was encouraged by the support of brands including Adidas and Nike, and that he would work full time with the team to re-establish the business.

He said: “I believe most strongly that JJB Sports can re-establish itself as a successful sportswear and sporting goods retailer which will become the destination store for everyone interested in sport. When I am satisfied that we are firmly on the road to recovery and after we have appointed a new chief executive, I intend to become part time chairman.”

He added that JJB Sports’ priority was getting the product offer right and reducing the company’s cost base. However, he warned that it would not be a “quick fix”.

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