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JJB issues profit warning

JJB Sports has issued a profit warning after like-for-like sales in its current trading period were lower than anticipated.

Like-for-like sales in the period from September 27 to November 7 increased by 13.1%, lower than anticipated after taking into account the retailer’s promotional initiatives and weakening market.

In a statement, JJB said it believes “that current trading conditions are having and will continue to have a negative impact on its expectations for the full year.”

It added that, as said in its September 28 update, the “full year outcome remains heavily dependent on our performance during the important pre-Christmas and New Year sale period”.

In the period from August 2 to November 11, like-for-likes have increased 11.5%. Total group revenue was up 9.1%. Overall gross margin for the period was 37.6%, significantly affected by promotional activity.

Year to date like-for-like sales were up 13.4% compared to the same period last year. Net debt at November 7 was £16.6m.

Singer analyst Matthew McEachran said: “Losses this year are likely to widen to £40m as a result. More critical is cashflow, and this latest warning increases the likelihood of having to raise additional cash.

“This is a disappointing update and confirms there are several obstacles to JJB’s recovery. The focus in the short term has to be on cash generation, in order to avoid a covenant breach and to create reinvestment opportunities back into the estate.”

The retailer’s operating board is complete with the arrival of Kate Hayes as trading director, Ron Rome as retail director, Paul Mitford as HR and training director and Debbie Robinson as marketing director.

The retailer said it has refurbished stores in Wakefield, Northampton, Leicester Fosse Park, Enfield and Bath to the same design as its Slough store and “early signs are encouraging”.

It reiterated that as reported in the half year, Bank of Scotland, the company’s bank, agreed in September that it would not test the EBITDAR covenant in October to enable more promotional trading.

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