May 25, 2011
JJB says turnaround to take years as losses balloon
May 25, 2011
May 25 - JJB Sports, the struggling British retailer rescued by a deal with landlords in March, said its full-year loss ballooned to 181 million pounds ($293 million) and it could take five years to fix the business.
JJB Sports said on Wednesday trading in the first quarter of its new financial year met its expectations and it planned to revamp 150 stores over the course of the year, following a big rise in profit and sales at pilot outlets.
However, it said a full recovery would take 3-5 years in a tough business environment, with consumer spending under pressure from rising prices and austerity measures.
"The restructuring of JJB will not be easy or quick. The retail environment is challenging, will remain so for some time and we face intense competition."
The loss made by JJB, which competes with larger rival Sports Direct as well as grocers and online retailers, in part reflected poor stock packages available to the company as it struggled for survival. It made a loss of 68.6 million pounds in 2009/10.
JJB's rescue deal with landlords in March was the second in two years, and allowed it to close weaker stores and cut rent payments on some others. Without the deal, it would have fallen into administration and creditors would have lost more.
JJB, which has raised 96.5 million pounds to fund its turnaround plan, said sales at six revamped stores were 16 percent above the group average, with gross profit up 30 percent.
The new stores have improved layout and labelling, and are targeting at keen amateurs, recreational sports participants and sporting families.
JJB shares, which have lost about 90 percent of their value over the past four years, closed at 26.25 pence on Tuesday, valuing the business at about 75 million pounds.
(Reporting by Mark Potter; Editing by Dan Lalor)
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