JJB revival plan hit as its losses mount

SPORTSWEAR chain JJB Sports yesterday warned that it will take as long as five years to turn round the business after it reported mounting losses.

The full-year losses almost doubled to £181.4m. The retailer was saved from administration in March when it hammered out a company voluntary agreement with its landlords, closing up to 89 unprofitable stores.

JJB also recently raised £96.5m to fund a turnaround plan, which saw the company relegated to AIM.

Chairman Mike McTighe said yesterday: “The restructuring of JJB will not be easy or quick and will most likely take three to five years. The retail environment is challenging, will remain so for some time and we face intense competition.

“But the work undertaken over the past six months, together with the crucial support of all our stakeholders have given JJB a chance to survive and ultimately to prosper.”

JJB, which is based in Wigan, has earmarked the funds raised to revamp 150 stores this year to try to entice shoppers back. Analysts at Panmure Gordon reiterated their “buy” recommendation on the stock.

“We believe that JJB now has the strategy and the finances to realise its potential, but this will obviously take time to come through in the numbers.”

JJB has tapped shareholders for cash three times over the past 18 months, raising a total approaching £200m.

TIME LINE | JJB’S TROUBLED HISTORY

September 2008
JJB announces unimpressive interim results, raising doubts over the company’s future.

February 2009
JJB puts its Qube and OSC subsidiaries into administration after failing to find buyers. By the end of the week, the company wins a reprieve from its bankers to avoid putting the whole group into administration.

March 2009
Avoids going into administration by selling its fitness club for £83m.

May 2010
Reports losses of £70m.

February 2011
JJB and JD Sports revealed to be in merger talks, as JJB announces plans to enter into a company voluntary arrangement (CVA).

March 2011
Company unveils a £65m recovery strategy to revamp stores, close loss-making outlets and invest in online.

March 2011
Creditors back JJB’s CVA plans to avoid going into administration while JD Sports backs out of merger plans.

April 2011
JJB announces plans to raise £65m from another share placement to provide emergency additional funding.

March 2011
JJB warns that recovery plan could take up to five years.

by Shiba Babamiri