30 August 2012 10:16
Wigan-based retail chain JJB Sports has said that it will not be able to raise the funds needed for a turnaround of the business.
The company, which has 180 stores and employs 4,000 people, announced it has put itself up for sale following a slump in sales and a string of profit warnings.
The company received its most recent lifeline just four months ago when it secured £20 million from US retailer Dick's Sporting Goods and a further £10 million from existing shareholders, who include the Bill and Melinda Gates Foundation.
It earmarked £20 million of the most recent funding on converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much-improved sales and margins.
But it admitted last month that continued poor trading meant it would need additional funds for the programme sooner than it had expected.
The company said today it now believes it will not be able to raise the level of support required to implement the turnaround. It added: "As a result, the board has decided to conduct a formal sale process of the company and now wishes to invite offers to support further investment in the company, which may result in a sale of the company or its assets."
JJB has debts and outstanding loans totalling £36 million and given the level of current borrowings it said there "can be no assurance that any proposal or offer that may be made would attribute value to the ordinary shares of the company."
Matthew McEachran, a retail analyst at Singer Capital Markets, said JJB's big rivals Sports Direct and JD Sports Fashion were now poised to pick up a chunk of the store estate.
He said: "On the assumption that a sale is unlikely, the next step is likely to be administration which will inevitably see capacity withdrawn via closures, albeit not necessarily of the entire business."