Sports retail chain JJB Sports has confirmed today that it is on the verge of securing new financing for its struggling operations.
Reportedly, a number of potential investors have been sounded out about bringing capital into the business and the retailer has now suggest that those talks have become advanced with at least one interested party.
JJB came close to administration just over 12 months ago and while significant cost-cutting at the business has seen overheads slashed, its sales have continued to contract.
A statement released by the retailer today read: “The company confirms that it has in recent weeks held discussions with its lending bank and a number of potential strategic partners and investors about raising additional financing for the company.
“Constructive discussions continue with the company’s lending bank and one of the potential strategic partners and have been widened to include other key stakeholders. There is no certainty that these discussions will result in the company reaching agreement for the provision of additional financing.”
Rumours of a potential takeover of the business saw its share price soar, prompting JJB to release its statement, and since the start of trading today its listed price has grown 34 per cent to 13.75p.
Additional investment would be hugely welcome for the retailer which had to pass a company voluntary arrangement, which saw the closure of 89 stores and the slashing of rental rates at its remaining outlets, last March in order to continue as a going concern.
In February the retailer announced that the first five week of trading in 2012 had seen cash gross margins improve by 32.1 per cent, but weak consumer spending levels meant like-for-like sales were still down 5.7 per cent year-on-year.