Beleaguered sports retailer JJB Sports is to sell 20 of its stores to rival Sports Direct as the company officially announced the appointment of administrators from advisory firm KPMG today.
Sports Direct will also acquire the brand and its website, securing around 550 jobs in the UK, including warehouse staff.
However, the remaining 133 stores will close today, creating 2,200 redundancies as 167 employees are retaining their positions to assist administrators.
Richard Fleming, UK Head of Restructuring at KPMG, said of the move: “Successive attempts to restructure the business, both financially and operationally, have not been enough to prevent the company falling into administration.
“Unfortunately a buyer could only be found for 20 stores on a going concern basis. All staff made redundant as a result of store closures have had their arrears of wages and holiday entitlements paid in full.
“Our team of employment specialists will be supporting staff on completing redundancy forms and putting them in touch with job seeker services.
“We will now be reviewing what options are available for the remainder of the business, such as selling leasehold interests.”
Net proceeds of the sale, which have not been revealed, will be used to pay the retailer’s outstanding debt to its lender and other secured creditors.
Last month, Sports Direct announced that group sales in the 13 weeks ending July 29th 2012 jumped 25.3 per cent to £519 million during “this unprecedented summer of sport” and it is hoped that its deal with its competitor will further strengthen its offering.
David McCorquodale, corporate finance partner who led the sales process, explained that the sale is a positive one despite its difficulties.
He commented: “In spite of the severity of financial distress suffered by the business, we spoke with over 100 parties in the first few days of our appointment; with eight trade and private equity players tabling first round bids.
“Unfortunately the level of cash and further operational restructuring required to rescue a more substantial part of the business was too much risk for most interested parties.
“We hope to be able to sell the leasehold interests of some of the remaining stores, which may result in re-employment of some staff.”