JJB Sports attracts cash-rich Dick's

Dick's Sporting Goods is investing £20m in JJB Sports. Which means the final whistle hasn't blown for the retailer just yet...

by Dave Waller
Last Updated: 06 Nov 2012
JJB must be thanking its sporting gods: fresh legs are coming off the bench just in time to help it beat off a potential whitewash. In a tough retail environment the retailer has taken a kicking from its larger rival, Sports Direct, and even required a restructuring agreement with its landlords last year to prevent it falling into administration. To add insult to injury, its former boss Christopher Ronnie was charged by the SFO on Wednesday with seven offences relating to a £1m fraud. So while it’s struggling on the pitch, if found guilty, it could damage its chances on the fair play league table.

At least the retailer can now boast some added firepower. JJB reckons the deal with the US chain – along with a separate agreement with investors worth £10m and another with key supplier Adidas to provide securities on loans worth a potential £15m – will help it to accelerate its turnaround plan. A strategy which has so far consisted of closing some stores and revamping others to focus on sporting families and keen amateurs.

The Pittsburgh-based Dick’s is the largest publicly traded US sporting goods retailer, running over 550 stores across the pond. It wants to become a controlling shareholder in JJB, to help its plans for international expansion. Dick's said it would purchase £18.75m in junior secured convertible notes and £1.25m in ordinary shares in JJB, subject to approval of the Wigan company's shareholders. Dick's has also received an option to buy an additional £20m in junior secured convertible notes in 2013. Upon full conversion of the notes, Dick's would become a controlling shareholder.

It’s certainly a ballsy move. Britain's retail sector is hardly the smoothest of playing surfaces at the moment, with scores of household names going down the chute in recent years thanks to cut-price competition from supermarkets and the internet, rising prices, static wage growth, rising unemployment and government austerity.

That said, if JJB sort out its stores there’s a golden chance to benefit from this summer’s European football championships and the fact that the Olympics are being staged right on its doorstep. There’s nothing like a couple of major sporting events to get sporting families and keen amateurs back out on the court and the footie pitch. For five minutes, at least…

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