JJB was 'dangerously close' to insolvency
JJB Sports has conceded that bad business decisions over the last year brought it Â“dangerously closeÂ” to insolvency.Sales slumped at the group, which has posted an operating loss of £7m for the 52 weeks to 25 January 2009, compared to a profit of £34.3m in the previous year.
In its preliminary results for the period the group shows a 13.4 per cent dropin sales equated to a 6.9 per cent like-for-like decrease, giving revenue of £718.3m. In the 2007/8 financial year the retailer's revenue had been £811.8m. Gross margins, however, rose slightly this year.
“Our 2008/09 results reflect the disappointing performance of JJB Sports as the business struggled to re-position itself in a declining retail environment, resulting in severe operational and ultimately financial difficulties,” says JB executive chairman Sir David Jones. “Since I became Executive Chairman in January 2009, we have made significant inroads to restoring the Group's financial stability - against all the odds - and we have initiated a strategic path to growth.”
Jones says the company's restructuring programme is now having an impact on performance: “We now have the opportunity to revitalise JJB Sports as a focused multi-channel retail business, specialising in sporting goods and sportswear. I am confident that the executive management team we now have in place has the skills and conviction to deliver on that exciting potential, despite the challenging market conditions we expect in the months ahead. There is still much to be done but we are determined to succeed and to serve the best interests of our customers, employees and shareholders.”
In a statement that was critical of the previous management team and its strategy, Jones describes the financial restructuring of the company to ensure its survival as “a nerve-racking experience”. JJB is now positioning itself as the destination for customers who are 'serious about sport', as opposed to more fashion-led rival JD and price-led Sports Direct.
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