Sports retail firm JJB Sports has today reported a five per cent year-on-year rise in its like-for-like (LFL) sales over the four-week Christmas period but trading across the second half of the year has remained difficult.
The embattled trader, which needed to implement urgent finance measures at the beginning of last year to save itself from administration, saw LFL sales drop 7.8 per cent in the 21 weeks ending December 26th 2011 although this was an improvement on the 17.7 per cent decline seen in the first half of its financial year.
Cash gross margin has fallen by 20.8 per cent in the cumulative 47 weeks of the fiscal year so far but despite heavy discounting across the high street over the festive period it was up six per cent over the last four weeks of this period.
Keith Jones, CEO of JJB Sports, commented: “Our overall trading has improved in the second half of the financial year and we achieved a Christmas trading performance broadly in line with our expectations in the face of an extremely challenging consumer environment.”
Heavy snowfall severely disrupted trading in the run-up to Christmas last year, and the fallout meant JJB could not meet its payments on its debt and had to around £30 million in capital to stave off administration.
By March the retailer had agreed with its landlords a company voluntary arrangement which allowed for the closure of 89 stores from its portfolio and the reduction in rent payments of as much as 50 per cent on some properties to allow the company to survive.
Matt Piner, Lead Consultant at retail analyst group Conlumino, argues that in light of these circumstances this year’s Christmas trading figures represents only minor success for JJB’s turnaround strategy.
“On the surface this looks like a positive update, however, it has to be set against extremely soft comparatives from Christmas last year when sales were down 15.7 per cent because of bad weather and stock availability issues,” Piner explained.
“In that sense, anything lower than a mid single digit positive number would have been a terrible performance.”
Piner also points out that the number of stores closed by the trader since last year will mean that total sales, not disclosed by the firm, will be much lower than the LFL figure.
Despite the far from positive immediate outlook for the UK economy, Jones believes there will still be reason for JJB to be cheerful in 2012.
“Looking ahead, the ongoing credit squeeze on consumers and weaker UK employment numbers creates a tough environment,” he explained.
“We continue to implement our turnaround aware of the importance of the periods of the January sales, European football championships and London Olympics.”