More bad news from sportswear retailer JJB Sports: it admitted today that like-for-like sales fell by 7% over the Christmas period, which is likely to leave the chain somewhere between £5m and £10m in the red for the year to January 25. To make matters worse, it was also forced to confess yesterday that CEO Chris Ronnie no longer owns his 27% stake in the business, because he was forced to hand it over to failed Icelandic bank Kaupthing last year – but hadn’t bothered to mention it to the rest of the board. Presumably there’s no way Ronnie can survive that – so it looks like JJB will also find itself looking for a new boss…
As many were predicting (especially after rival JD’s strong showing) JJB’s trading update was pretty grim today. Its pre-Christmas discounting failed to lure in the punters, with like-for-like sales in its LifeStyle business (the 400-store retail arm, which also includes the Original Shoe Company and Qube chains) down a painful 8% on last year. This is going to push the company firmly into the red for the year. The only good news was that its health club division actually saw revenues rise by 8.4%; JJB will now look to flog that part of the business ASAP, to try and raise a bit of cash to pay down its £60m debts (although the bad news is that it will probably only attract fire-sale prices).
But it had already been a wretched week for JJB, given the extraordinary saga about the CEO’s shares. Ronnie bought the stake 18 months ago for £190m, backed by Icelandic money. But it appears that at some point in the interim he managed to breach the loan agreement, allowing Kaupthing to take control of the shares. The only reason the JJB board even found out is because the bank’s administrators have just told them – for his part, Ronnie apparently said that he was ‘not aware of the date or place of the relevant transaction or of the price per share in respect of the transaction’. And to compound matters, nobody even knows where the shares are any more. Doesn’t exactly inspire confidence, does it?
The only good news for investors is that JJB has persuaded Sir David Jones, the man who resurrected the fortunes of Next, to step into the executive chairman role, and he’s brought in former Selfridges boss Peter William-Jones as head of strategy (presumably he’d be the obvious candidate to step into Ronnie’s role if the CEO makes a hasty exit). But with JJB shares having lost 96% of their value during Ronnie’s tenure (they sank to a measly 11p this morning), they’re going to have a big job on their hands to turn things around...
In today's bulletin:
Mandelson launches £20bn finance scheme for SMEs
Mervyn Davies steps up as Citigroup becomes bitty group
JJB chaos as sales slump and Ronnie left red-faced
Goldfingers: the men with the Midas touch
SME's glass really is half-full