JJB SPORTS warned yesterday it could breach the financial covenants of its £25m revolving credit facility with Bank of Scotland (BoS) by the end of January next year citing continued difficult trading conditions as the main reason.
The trading statement comes less than a month after the firm, which employs 6,300 staff nationwide, put out a profit warning for the full-year blaming poor sales numbers and promotional activity. At the time it warned that much would depend on Christmas and New Year sales picking up.
The company said it was actively engaged in constructive discussions with BoS and their advisers in relation to the testing of the financial covenants and more generally in relation to the future financing of the business.
JJB said trading conditions had remained extremely challenging since it issued the profit warning adding like-for-like sales had remained below expectations. The company said it expected sales to also be affected by the continuing adverse weather conditions. It added that even with two months of important trading remaining of its financial year, which included the Christmas shopping period as well as New Year sales, the outlook for the full-year remained uncertain.
JJB said it was exploring further business restructuring options and considering alternative sources of finance, adding BoS continued to be supportive of the actions the management were taking.
JJB’s shares plunged as much as a third to a 23-month low of 3.9p yesterday, finally closing 18 per cent lower at 4.7p as analysts warned investors to expect a deeply discounted rights issue little more than a year after the firm’s last cash call for £100m.