JJB sales down 13.5%
JJB Sports said on a like-for-like revenue for the period from 24th January to 13th March was 13.5% lower than last year.
Total Group revenue for the same period was down 14.6%. Overall gross margin for the same period was 36.3% compared to 40.4% during the equivalent period last year. Net debt at 13th March 2011 was £9.1m. JJB said economic conditions mean that prospects for UK retailers remain challenging with volatility making accurate forecasting difficult.
However, over recent weeks, it has been achieving its internal expectations in relation to trading. The need for effective promotion to stimulate sales and generate cash, albeit at the inevitable expense of margin, continues. JJB has finalised a revised business plan with the aim of restoring the viability of the Group's business model and returning the business to profitability in the longer term.
The revised business plan aims to re-establish and promote JJB as a trusted sports retail brand by improving its store portfolio and product proposition, continuing to develop its multi-channel offering and strengthening its people and service offering.
The Company intends to continue its cost reduction initiatives and tight management of working capital. In order to implement the revised business plan, the Company is intending to raise £65m (before expenses) by way of a firm placing and placing and open offer.
The Company has reached agreement in principle with each of its major shareholders - Harris Associates, Crystal Amber, Invesco Asset Management and Bill & Melinda Gates Foundation Trust - to participate in the proposed capital raising up to an aggregate amount of £65m, subject to a number of conditions.
In addition, it is intended that certain otherexisting shareholders and other institutions will be invited to participate in the proposed capital raising as part of a bookbuild, which is being led by Numis. It is expected that this bookbuild will be completed on or around 4th April 2011. Subject to market and other customary conditions, it is intended that the proposed capital raising will be underwritten by Numis.
The Company will only launch the proposed capital raising if the CVA Proposals are approved at the meetings of creditors and shareholders to be held on 22nd March 2011. In addition, the Company has reached agreement with its lender, Bank of Scotland, for the provision of a committed working capital facility of £25m through to 31st May 2014, subject to the completion of certain conditions precedent including the receipt of proceeds under the proposed capital raising.
The Board is of the opinion that, subject to the successful implementation of the CVA Proposals, the proposed £65 million capital raising (before expenses) and provision of the £25m committed working capital facility by BoS would provide the Company with sufficient working capital for its present requirements and enable it to implement the revised business plan. The Company said its principal suppliers and strategic partners, Adidas and Nike, remain strongly supportive of JJB and its future plans.
Mike McTighe, JJB Chairman, said: "JJB's restructuring continues as planned.The proposed £65 million capital raising and the continuing support from our major shareholders and our lender, Bank of Scotland, will provide us with the working capital we believe we need to implement our revised business plan. The whole management team remains focused on this restructuring and committed to delivering a stable future for JJB and its employees. "We continue to engage with all of JJB's stakeholders, including landlords, shareholders, our lender, suppliers and our colleagues. Today's announcement is the result of this ongoing dialogue and we are continuing to build real momentum among this 'coalition of the willing'. "The next key stage in the process is the creditor and shareholder votes next week. The Board remains confident of the success of this turnaround and the future prospects for the Company."
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