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JJB Sports seeks urgent funding as sales plummet

Embattled sports retailer JJB Sports said it needs funding more quickly than expected to tackle the tough trading conditions and is in discussions with its “strategic partners” about raising capital to fund its turnaround.

As group like for like sales slumped 8.7% in the 24 weeks to July 15, JJB Sports said: “The level of future headroom on working capital facilities and financial covenants will be significantly reduced in the short and medium term.

“This is likely to accelerate the timing of the additional funding required, which is dependent upon the trading performance of the business and the successful implementation of the management initiatives. 

“Given the potential requirement to accelerate funding to implement the turnaround, the Group is in discussions with “strategic partners”.

As it revealed earlier this month JJB Sports said it had been hit by a “deterioration in trading performance against management expectation”. It said performance in May and June was particularly disappointing due to poor sales of football replica kits and product associated with Euro 2012, as well as the bad weather.

As a result, sales and cash margins have fallen 16.6%, “materially short of expectations”.

JJB reiterated that there are “material uncertainties facing the business”, including the ability to implement its business recovery turnaround strategy “in light of the macroeconomic environment and the Group’s stock profile”.

JJB said: “In light of the deterioration in trading, the directors have sought to implement a combination of management initiatives, which were identified in the 2012 Results, and have been successful in mitigating the trading and cash shortfall to a certain extent.  However these actions have not fully mitigated the shortfall.”

It added that as a result it would need funding sooner than expected. 

Bob Corliss, who was appointed as deputy chairman/chairman elect with effect from July 9, said: “There is a lot of work to do, and we have hit the ground running. 

“We are continuing to work collaboratively with our business partners to address the challenges faced by JJB. I am excited to work with a brand that has a strong heritage in such an important market.”

The retailer said the timing of its refurbishment programme may also be hit. JJB has refitted five stores this year, which it said have shown an increase in sales and cash margin compared to the rest of the core estate of 22 percentage points and 23.4 percentage points respectively.

Readers' comments (2)

  • mel jane

    Two things Ive heard : The sports replica kits (Ive heard someone say) can sometimes be a toy that is played with for a while then forgotten - as children grow out of fads/hobbies/

    Personally Ive seen that football clubs are selling there own so maybe theres too many being sold or theyre not profitable

    The look of the store I feel is confusing as there are so many clothes on display and it is irritating trying to sort through thousands when you can only afford or want a few items As is practicable. Ive heard people say this so many times things come off hangers and people crush into small spaces to get cheap items banging into each other etc

    From my degree in fine art/textiles I definitely know the term easy on the eye off by heart and thats what Im getting at when I say everything jumbled together isnt as good as things spread out more /put together differently and maybe add a bit of less is more -

    I often find I give clothes away as Ive bought too many and get bored of them/they go out of fashion/dont wear them out

    It is nice to see staff in a uniform or semi uniform that goes with the brand though - like having the staff wear sports type wear

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  • JJB hasn't been a viable investment for some time. The brand is finished and the sooner this black hole is gone the better as there are many businesses that are run better that need investment, rather than the hopeless JJB.

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