Sports retailer JJB Sports is formally for sale following a deterioration in trading, it has been announced today.
Directors do not believe that the retailer is in a position to raise the level of funds necessary to produce a turnaround, despite discussions with strategic partners over ways to raise capital and restructure its store portfolio.
Advised by KPMG, the retailer warned that “there can be no certainty that a proposal will be forthcoming or that an offer will be made”.
This development follows poor results for the sports specialist in recent times which led it to announce in July that sliding sales and the continuing poor macroeconomic climate was likely to lead the company to seek additional funding earlier than anticipated.
Earlier this year, JJB announced a £30 million investment in the hopes of reinvigorating the business, with existing shareholders injecting £10 million into the project while US retailer Dick’s Sporting Goods invested £20 million.
However, earlier this month, Dick’s Sporting Goods announced that it had written off the value of the investment in just five months, noting that the retailer’s performance had fallen considerably short of initial expectations.
Announcing results for the six weeks to August 26th 2012, JJB revealed that like-for-like (LFL) sales fell 3.3 per cent while its LFL cash margin plummeted by 9.5 pr cent as the business struggles to maintain a presence in an increasingly competitive market.
Last week, Rangers football club ended its four year relationship with JJB and confirmed a joint venture with competitor Sports Direct which will see the sports products & clothing retailer sell the club’s merchandise across its stores.
Net bank debt for the company as of August 28th 2012 was £16.5 million though the company noted that Bob Corliss will assume the role of Chairman from September 1st 2012 and lead the sale process as part of its strategy.
A statement from JJB said: “Given the level of current debt within the Company, there can be no assurance that any proposal or offer that may be made would attribute value to the ordinary shares of the Company.
“The Board will update the market as to the status of the process in due course.”