Sports retailer JJB Sports reports fall in FY results

21 May '09

4 min read

JJB is publishing its Interim Management Statement relating to the 16 week period to 17 May 2009.

Trading update
Group revenue for the 16 week period to 17 May 2009 was 42.1% lower than the same period last year. On a like-for-like basis (on operating units that have been trading for over 52 weeks) the total revenue was 23.3% lower. This comprises a 25.8% decrease in retail store chain revenue and a 7.1% increase in revenue from the fitness clubs, which were sold on 25 March 2009.

We believe that the decrease in like-for-like retail sales is largely as a result of low stock levels, the negative publicity which has surrounded the Company, and the current retail environment. As a result of our financial difficulties over the last nine months the Company has had to exist with stock levels significantly below the previous year. Many suppliers have been reluctant to supply stock because of the lack of trade credit insurance and the widely held belief that the Company was likely to go into administration. As the lead times between the ordering of product and its delivery can be up to six months we do not anticipate any significant improvement in sales until the 4th quarter of 2009.

The combined gross margin achieved during the same period was 580 basis points lower than the comparative period last year.The stock holding in the retail business is 46.9% lower than at the end of the same period last year. Following the disposal of the fitness clubs business, the Company has been reducing costs to align its cost base with the sports retail focussed shape of the continuing group. This process of cost realignment continues.

Update on restructuring and refinancing
The Company is currently in the process of a restructuring and refinancing programme, full details of which were announced on 25 March 2009 and 6 April 2009, that comprises a CVA proposal and, conditional upon the implementation of the CVA proposal, new financing arrangements. Documentation relating to the CVA proposal was published on 6 April 2009 and the terms of the interconditional company voluntary arrangements of the Company and its wholly-owned subsidiary Blane Leisure were approved by creditors and members at meetings held on 27 and 29 April 2009,
respectively.

The Company currently expects the CVA proposal to be implemented on or around 28 May 2009. Following implementation of the CVA proposal, the new financing arrangements are expected to become available to the Group on or around 1 June 2009. At this time, the standstill arrangements under which the Company is currently operating will be terminated, historical financing arrangements will be repaid and terminated and, pursuant to the shareholder authority granted at the general meeting on 29 April 2009, the Company will issue warrants to Bank of Scotland (BoS), one of the banks offering continuing support, to subscribe for new ordinary shares representing approx 4.5% of the Company's current shares in issue.

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