JJB Sports is investigating why its chief executive Chris Ronnie failed to inform the company until yesterday that his stake in the business had been transferred to the administrators of Icelandic bank Kaupthing at some point last year. Separately JJB warned it would rack up losses of between £5 million and £10m for the year ended January 25.
JJB Sports said it was completely unaware that the ownership of shares had changed until Ronnie informed it yesterday. Ronnie said he was not aware of the date or place, or of the price per share of the transaction.
The Financial Services Authority is also believed to be investigating share disposals at JJB Sports. Reports suggest Ronnie’s failure to disclose the change in ownership broke two separate City regulations.
Ronnie, acquired 27.5% stake in JJB Sports in June 2007 via a company called Guro Leisure, formerly known as Hallco 1480. He is understood to have borrowed the money to buy the shares from Kaupthing but breached his personal loan agreement with the bank at some point last year. As a result, the shares transferred back to Kaupthing.
A spokesman for JJB Sports said: “JJB Sports has asked legal advisors to continue an investigation into this matter to look into exactly what happened and when. JJB Sports’ operation will not be affected.”
He added that JJB Sports was treating it as a serious matter and that it would consider suspending Ronnie.
Separately JJB Sports said sales at its retail division, excluding its Original Shoe Company and Qube stores, fell 8% for the five weeks ended January 11. It said losses would be between £5m and £10m before any one off costs associated with its banking facilities. Within that, it said that its Lifestyle division, which includes Original Shoe Company and Qube, would incur a loss of around £15m for the full year.
JJB Sports confirmed it was considering its options in relation to the Lifestyle division.
It added that its banks remained supportive of the company and that discussions were ongoing with a view to agreeing a basis for continued support.
JJB Sports chairman Sir David Jones said: “We have started a comprehensive review of the business - including product offer, store layout and operating systems. 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.”