Trading of JJB’s shares has been suspended while the company puts the deal together, although JJB said its shops will remain open for business in the meantime. It is widely expected to be a pre-pack administration deal, which will allow the chain to clear most of its debts, and KPMG has been asked to lead the process.
The announcement comes almost a month after JJB was first put up for sale after it became clear a turnaround was impossible. The cash JJB received earlier this year - £20m from US retailer Dick's Sporting Goods and £10m from existing shareholders – wasn’t enough to stable the company’s finances and JJB was sitting on heavy losses (in 2011 the retailer made a pre-tax loss of £101.1m.)
The downfall of JJB Sports, which sells everything from golf balls to football shirts, has been a dramatic one. Before the recession took hold in 2008 JJB was the largest sportswear chain in the UK. But as consumers reined in spending, sales began to fall behind budget-priced rivals Sports Direct and JD Sports. Shareholders including the Bill and Melinda Gates Foundation pumped money into the business but it wasn’t enough to restore the chain’s fortunes.
At its peak in 2005 JJB had 430 stores, more than 11,000 staff and shares trading for around £14 a piece. Now JJB has 180 stores, 4,000 employees and its shares are – as of today – worthless.
The business is now likely to be broken up, with Sports Direct expected to take a handful of stores. Stafford Group, the Irish sports company, is also thought to be interested in parts of the business. But it’s unlikely JJB Sports will manage to offload all 180 stores - which means 4,000 jobs are now under threat.