JJB Sports said like-for-like sales slumped 13.5% in the period between January 24 and March 13 as the sportswear retailer published its revised business plan and proposed financial arrangements.
Total group sales for the period dropped 14.6%. JJB said management’s internal expectations for the full year remain unchanged and that the retailer had achieved its expectations in relation to trading.
The retailer has proposed the raising of £65m by a firm placing and open offer. JJB has agreed in principle with each of its major shareholders – Harris Associates, Crystal Amber, Invesco Asset Management and Bill & Melinda Gates Foundation Trust – to participate in the proposed capital raising. Other shareholders or institutions will also be invited to participate, led by Numis.
As part of the business plan, JJB wants to continue to source new ranges including exclusives from suppliers, and develop exclusive branded products such as Run 365 and Slazenger Golf.
The plan also proposes the axing of some stores through its proposed company voluntary arrangement (CVA), investment in the store portfolio through three levels of store and proposition development – dubbed ‘retail basics’, ‘refresh refit’ and ‘full transformation’.
Retail basics includes improving stock selection, buying, allocation, replenishment and clearance markdown management. This will enable JJB to align stock packages to type of store, improve stock availability and clear old stock. This will affect about 133 stores, and JJB wants to invest approximately £4.4m in the 2012 financial year with a two year payback targeted.
Refresh refit will remix the store space and improve the customer experience with new signage, and a focus on footwear departments. This will cover approximately 14 stores in 2012 and 27 stores in 2013, and JJB will invest approximately £1.4m the first year, then £2.7m the second year.
Full transformation will cover 22 stores in 2012 and 28 stores in 2013 with the shops being revamped in line with its existing six refitted stores which have recorded a 16% increase above the company average. The project includes new fixtures and fittings, mezzanines where appropriate and improved navigation. It will invest £6.1m in 2012 and £7.8m in 2013 and a payback of between three to five years is targeted.
JJB also plans to spend £2.5m in 2012 and £2.3m in 2013 for general capital programmes such as maintenance and IT, and website development.
JJB wants to focus on training, improve the multichannel proposition, and exploit efficiencies in warehousing and distribution, stock management, store wages and sales management.
JJB is targeting improved retail gross margin of approximately 45% in 2014.
Internet sales are expected to grow by around 20% per annum from approximately £11m in 2011 with a like-for-like target of low single-digit growth for the 2012 fiscal year.
JJB will only launch the proposed capital raising if the CVA is approved. It has also reached an agreement with the Bank of Scotland for the provision of a working capital facility of £25m through to May 31, 2014.
JJB chairman Mike McTighe said: “The next key stage in the process is the creditor and shareholder votes next week. The board remains confident of the success of this turnaround and the future prospects for the company.”