‘The directors do not believe that the company will be able to raise the level of funds required to implement the turnaround,’ says JJB in a statement today. JJB Sports has now asked KPMG, its adviser, to find a buyer. But the high street retailer has stopped short at putting a figure on the deal.
This could be a tough sell for incoming chairman Bob Corliss. Despite managing to shrink its net debt £16.5m at August 28, down slightly from £17.7m in July, JJB has been forced to admit that an offer for the group could render its ordinary shares worthless.
JJB has been losing ground against rival Sports Direct over the past year. As a result, turnover at the retailer has been steadily falling. Revenues for the year to January 2012 show a 13.1% drop in like-for-like sales and a pre-tax loss of £101.1m. JJB Sports was hoping that the 2012 European football championships and London Olympics would provide a welcome boost, but this failed to materialise. Latest figures show that like-for-like sales are actually down a further 3.3% in the six weeks to August 26.
The writing was on the wall for JJB Sports earlier this month, when Dick's Sporting Goods said it had written off its entire investment. JJB Sports’ shares lost a quarter of their value as a result. After today’s announcement, JJB's shares have more than halved again, falling 1.64p to 0.73p.
No deadline for a sale has been set but this will be a nail-biting time for the Wigan-based firm’s 4,000 staff. JJB Sports needs a white knight fast…