Sports retailer JJB Sports has announced today that is anticipates breaking parts of its credit agreement with Bank of Scotland (BOS) due to unexpectedly poor trading performance over the last few weeks.
After issuing a profit warning last month, the retailer has reported that trading conditions remain extremely challenging and like-for-like sales have stayed under expectations.
When the company published half-year results earlier this year, it did not anticipate funding shortfalls over the coming 12 months but this position has now been revised.
A statement from JJB stated: “The Company now believes that it is likely that it will breach certain financial covenants in the £25 million revolving facility provided by BOS when they are next tested at the end of January 2011.”
The retailer is in the process of restructuring its business model and six stores which have been revamped saw sales 11 per cent above and their money margin 21 per cent above company average in the for weeks to November 28th.
Its statement continued: “The Company is actively engaged in constructive discussions with BOS and their advisers in relation to the testing of these financial covenants and more generally in relation to the future financing of the business.
“BOS have welcomed the steps taken by management and continue to be supportive.”
Pre-Christmas and New Year sales are likely to be vital for the retailer but it claims that adverse weather has exacerbated an already weak trading period.