JJB’s survival hopes are given a boost by improved margins

The group, which has been closing stores as part of a turnaround programme, said the European football championships and London Olympics provide rare opportunities amid the bleak market.

The retailer said like-for-like sales in its second half, the six months to the end of January, fell 7.6 per cent. That was a big improvement on the 17.9 per cent sales slide in its first half.

Recent trading has improved further, said the retailer, with underlying sales in the five weeks to the end of January down 5.6 per cent. Gross cash margin during that period has increased by 32.1 per cent, it added.

Retailers are battling a weak consumer climate as shoppers are put off by rising unemployment, higher prices, a stagnant housing market, austerity cuts and Europe’s debt crisis.

Chief executive Keith Jones said: “Since our Christmas trading update our like-for-like cash margins have continued to improve and our full year trading performance is broadly in line with our expectations in the face of an extremely challenging consumer environment.

“Weaker UK employment numbers and the ongoing credit squeeze on consumers create a tough environment.

“However, we are continuing to implement our turnaround aware of the importance of the key trading opportunities afforded by the European football championships and London Olympics.”

JJB had net debt of £11.3m at the end of January.

Shares in the retailer surged 15 per cent to close up 1.5p at 11.5p.

However, analysts said JJB still has considerable work to do, with losses of £60m expected for the year just completed.

Freddie George, analyst at Seymour Pierce stockbrokers, maintained his sell recommendation and said he expects another two years of losses. “We are, however, becoming more confident on the outlook,” he added.

Last year JJB was forced to secure £96.5m in funds from major shareholders, as well as announce plans to close 43 unprofitable stores and place a further 46 on review in a bid to stave off administration.

The group’s turnaround scheme involves cutting costs and increasing sales through staff training, upgrading some of its 160 viable stores and improving its ranges. Mr Jones recently told the Yorkshire Post the turnaround includes plans to attract more women shoppers as he opened JJB Sports’ new store in Albion Street, Leeds.

“Regular customers with JJB are incredibly loyal and very satisfied with the proposition we deliver,” he said.

“But it has been a predominantly male audience, and has been overly focused on football, maybe to the detriment of other sports.

“We see a tremendous opportunity to provide something for female customers (in a way) that certainly JJB hasn’t provided in the past.”

JJB became the first retailer to move into Land Securities’ £350m Trinity Leeds development. Mr Jones described Trinity Leeds as “the principal high street regeneration scheme in the UK”.

Retailers were boosted last week by figures from the Office for National Statistics which showed retail sales volumes rose 0.9 per cent in January to give an annual rise of two per cent, as stores lured in shoppers with hefty discounts on household goods and furniture.

Economists had predicted a monthly fall of 0.4 per cent last month and an annual rise of 0.5 per cent.

Yesterday the retailer said like-for-like sales for the year to the end of January fell 13.1 per cent and its gross cash margin has fallen 22 per cent.

Peter Smedley, analyst at Charles Stanley, said the trading update was “underwhelming” and JJB is “simply running out of time and options”.

From just a single store...

Sports goods retailer JJB Sports was originally formed in 1971 to buy a single sports store in Wigan.

It was bought by David Whelan and after trading from four stores in 1976, the store portfolio had grown to 120 stores in 1994 when it floated on the London Stock Exchange.

In 1998 JJB Sports acquired the business of Sports Division. The acquisition then made JJB the largest sports retailer in the UK.