Struggling JJB up for sale after rescue plan rejected

The 180-store chain said it has appointed KPMG to find a buyer, after investors declined to back its latest rescue plan.

JJB, which has reported numerous profit warnings and attempted various turnarounds, had hoped to raise funds to inject into its stores.

But the group admitted yesterday: “The directors do not believe that the company will be able to raise the level of funds required to implement the turnaround.

“As a result, the board has decided to conduct a formal sale process of the company and now wishes to invite offers to support further investment in the company, which may result in a sale of the company or its assets.”

In July it blamed weak sales of replica football kits and wet weather for poor trading.

JJB yesterday said trading continued to deteriorate over the past six weeks, with like-for-like sales sliding three per cent and its cash margin falling 9.5 per cent.

The announcement, ahead of September’s rent day, raises the spectre of administration, according to analysts.

“Having consistently urged investors for the past two and a half years to avoid the stock, seeing little equity value left in the company, we now put our recommendation under review with a view to suspending or ceasing coverage,” said Charles Stanley analyst Peter Smedley.

“We suspect that JJB will now follow a similar process as Blacks Leisure i.e. a likely administration process followed by the possible sale of parts of its business.”

The company’s debts total more than £36m, including £16.5m of net bank debt, £18.75m of convertible loan notes and £1.1m of trade debt.

Shares in JJB plunged, closing down 1.98p at 0.39p, after the group said these debts mean “there can be no assurance that any proposal or offer that may be made would attribute value to the ordinary shares of the company”.

The group is 47 per cent owned by Invesco Asset Management, while the Bill & Melinda Gates Foundation own another five per cent, and together with other investors, they have provided much of JJB’s funding.

In April JJB, which has more than 10 stores in Yorkshire, announced a £30m fundraising plus a loan of up to £15m from sporting goods giant Adidas. That was meant to provide £20m of funds to transform 60 of its most important stores.

That followed two company voluntary arrangements in 2009 and 2011, which allowed it to close stores and raise funds.

KPMG insisted there will be considerable interest in the chain.

David McCorquodale, corporate finance partner at KPMG, said: “While it is very early days, I anticipate significant interest in the opportunity to acquire this leading multi-channel authentic sports retailer. There is a real place on the British high street for a retailer of performance gear for the sports enthusiast.”

JJB, which typically operates from superstores with an average of 11,000 sq ft of selling space, has been squeezed by weak consumer confidence, intense pressure from the internet and supermarkets and the strong growth of Mike Ashley’s Sports Direct operation. Its products range include trainers, replica shirts, bicycles and golf goods. A string of household retail names including Woolworths have gone out of business in recent years.

“It’s a business that’s been shrinking for the last couple of years,” said Seymour Pierce analyst Kate Calvert. “They haven’t been able to find their niche in the market place and be able to take on the likes of Sports Direct and online and supermarkets.”

Former Pace and current WYG chairman Mike McTighe, who has been replaced as JJB chairman by Bob Corliss, will now stay on as a non-executive director until the sale is complete.