US retailer Dick‘s Sporting Goods, a shareholder in beleaguered sports retailer JJB Sports, has written off the value of its £20 million pound investment in the company, it has been announced.
Dick‘s invested the money in new shares in April while an additional £10 million was generated by existing shareholders as JJB attempted to offset significant financial losses.
In its second quarter results announced yesterday, Dick‘s recorded a pre-tax impairment charge of $32.4 million (£20.6 million) related to its investment in JJB and noted that the retailer‘s performance has “materially deteriorated from its expectations” as a result of the worsening economic environment in Europe.
Edward W. Stack, Chairman and CEO of Dick‘s, said: “While we continue to believe in the underlying opportunity within the UK sporting goods market, in light of these developments and our own assessments, we have determined to fully impair the value of our investment.
“As we indicated at the outset, this is a high risk investment that was structured to provide us with meaningful upside and capped downside.
“We have no further funding obligations to JJB at this time and will continue to monitor the situation.”