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As of today, JJB Sports is for sale – and not just the products on display.
The British sports retailer decided to put itself up for sale after the Directors realised money is hard to come by, especially to a company whose business is continuing to take the hits of “poor macroeconomic environment”.
Earlier on, JJB Sports management still tried to hold talks with its strategic partners for ways to raise funds and restructure the business and bring it back to profitability. In April, US sports retailer Dicks Sporting Goods has already pumped £30 million for a 3.1% stake to revive the company, as well as additional £10 million from several existing shareholders.
“However, following these discussions, the Directors do not believe that the Company will be able to raise the level of funds required to implement the turnaround,” the company said in a statement today.
JJB Sports’ buyer will have to absorb the retailer’s £36.35 million debt if it decided to take over the company – an open invitation to whomever is interested to rescue the troubled sports shop at a time of government austerity measures, fierce competition, and stagnant salary growth.
Worthless
Shares plunged 78.9% by 12:21 PM GMT, with over 145 million shares traded and put the share price below its par value of 1 pence to 0.5 pence, after the company noted that shareholders should not expect any profit if the company is sold.
“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,” JJB stated.
JJB has not been making profit since 2009, accumulating an operating loss of about £512.2 million in the past three years and is about to report another loss for the 2012 financial year.
The 2012 London Olympics and the European Football Championships was not able to lift sales, with JJB reporting 3.3% drop in like-for-like sales in the six weeks ending 26th August, on top of the 8% decline for the 22 weeks to 1st July.
“The Board will update the market as to the status of the process in due course,” the company said.
Bob Corliss, who will assume Chairmanship of the sports group two days from now, will lead the search for the potential buyer, to be assisted by KPMG LLP.
Company Spotlight
JJB Sports plc started with one store in Wigan to about 180 stores, present in almost every town in the United Kingdom as well as in Ireland. The company was established in 1971 and joined trading on the London Stock Exchange in 1994.
