JJB Sports reveals £65m recovery plan - but there's a catch

Sports retailer JJB launches a last-ditch attack involving revamping stores and investing online. But don't get too excited: it's already 3-0 down and suffering an injury crisis...

by Dave Waller
Last Updated: 06 Nov 2012
The 250-store chain has now gone to shareholders looking for (another) £65m to fund the restructuring. That’s a cheeky ask at the best of times, and especially so since it has already pumped shareholders for £100m in 2009 and another £31.5m this year. But the company clearly has some generous supporters – major shareholders like the Bill & Melinda Gates Foundation Trust, Harris Associates and Crystal Amber have agreed to cough up for this latest £65m handout. Bank of Scotland is also stumping up £25m in working capital; given that getting cash out of a bank these days is tougher than getting the ball off a Barcelona midfielder, this is the retail equivalent of an away goal. Still, in for a penny and all that, we suppose.

This will, however, come at a cost. Their support will hinge on a key vote next week, when JJB asks landlords and shareholders to back controversial proposals to close up to 89 unprofitable stores over the next two years.

They’ll also be switching tactics, remodelling their remaining stores along the lines of six trial shops they’ve been running. According to JJB, these stores have been tweaked to appeal to keen amateurs and sporting families, and sales there have been running at about 16% above the company average. Presumably that’s not just a load of old boules.

JJB certainly needs to pull something special out of the bag. The chain, which employs 6,100 people, is like a relegation struggler whose chances of staying up are looking slimmer by the day. This latest attempt at survival follows the collapse of merger talks last week with rival JD Sports, which abandoned the plan citing a lack of information from JJB that would have enabled it to make a formal offer. JJB responded by saying JD's takeover proposal was ‘highly conditional and lacking sufficient certainty to be deliverable’. So they're blaming each other, basically.

It’s a shame, as in terms of offering at least, it looks like a decent pairing. While JJB is heading towards kitting out amateurs and families, JD is more about sports-related yoof fashion. And by doubling up they would’ve created a group of 750 stores.

Trouble is, in terms of financial clout they’re playing in different divisions. JJB is deep in the financial mire, with sales plummeting; it’s had boardroom trouble, not to mention a £455k fine for misleading the stock market. JD has actually done well out of the recession, so teaming up with JJB would be a massive risk. A bit like sticking a father-son pair in plimsolls in that Barcelona midfield, perhaps.

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