Struggling sports retailer JJB Sports has seen a dramatic jump in losses before tax to £66.5 million for its first-half period, according to a trading update published today.
Losses grew 177.1 per cent in the 26 weeks to July 31st 2011 and like-for-like sales declined 17.7 per cent over the same period, despite efforts by the group’s management to reform the ailing business.
Following a successful company voluntary arrangement (CVA) in March the retailer has closed 49 stores and re-laid 86 others to focus and improve its high street presence but following dismal trading, JJB has confirmed it will now cut back on any further capital investment.
Costs from the CVA have significantly impacted the company’s bottom line and a 6.4 per cent drop in gross margin to 35.8 per cent contributed to a 22.6 per cent slump in total revenues.
Keith Jones, CEO of JJB, defended the results, saying: “Despite the consumer environment being extremely challenging and expected to remain so for the foreseeable future, our re-sized store portfolio and other cost-saving initiatives have allowed us to manage the business and maintain tight financial controls.
“Our focus on people and processes is yielding early wins and with the continued hard work from colleagues across the group, I remain confident of JJB’s return to profitability and growth.”
Jones pointed to improved basic retail disciplines in the business since the CVA was passed, meaning cost cutting is ahead of schedule, but admits there is much more to do to return to profitability.
Sluggish high street trading throughout the year has not helped the retailer’s plans but a fundraising plan initiated in April meant net funds grew from £7.3 million to £17 million in the half.
Jones added: “Our results for the half year have been impacted by the closing of unprofitable stores and the sell-out of old and obsolete stock.
“Despite the tough trading climate, the business is in better shape than of late and has the opportunity to develop the JJB proposition into a truly authentic sports retailer over the next few years.”