JJB will not tap investors despite losses

Kasmira Jefford
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STRUGGLING retailer JJB Sports said it will not need to tap shareholders for cash, despite issuing a full-year profit warning as losses widened in the first half of the year.

Shares tumbled 19 per cent yesterday after the sports group said pre-tax losses almost trebled to £66.5m in the 26 weeks to 31 July from £24m a year ago, while like-for-like sales slumped 17.7 per cent.

The Wigan-based group, which counts Bill Gates among its major shareholders, ended its half year with net funds of £17m, having raised £96.5m over the past year to fund a turnaround plan. It insisted, however, that it has sufficient working capital.

The group was forced to close 49 unprofitable stores in the first half and sell out of old stock after negotiating a company voluntary arrangement (CVA) – a legal agreement with landlords to slash store rent costs. It was the second such deal in two years.

The group, which now operates from 197 shops and employs over 4,500, said revenue fell 22.6 per cent to £142m as retail conditions were tougher than expected.

Chief executive Keith Jones said trading had worsened since mid-September and, if current trends continue, the year-end result would be worse than expected.

Its performance over Christmas, the January sales and next year’s Olympics would be critical, the group said.

Shares closed at 11.5p yesterday, down by 2.75p.