Analysis: Is it RIP for JJB?

Time does appear to be running out for the long-suffering retailer. US sportswear giant Dick’s Sporting Goods, which ploughed £20m into the chain just a few months ago and was heralded as its saviour, wrote off its investment and declared that it will not be ploughing any more cash into the retailer.

Dick’s Sporting Goods was expected to invest a further £20m into the chain next year – cash JJB desperately needs now. And it seems its other shareholders have finally run out of patience after investing seemingly endless amounts of funds into the ailing retailer. Shareholders Invesco and Crystal Amber are understood to be plotting to buy JJB’s debt to force a restructure.

However, many observers believe an administration is the most obvious restructuring route.

Charles Stanley Securities retail analyst Peter Smedley said: “An administration process seems the only option. Its investors will be trying to recoup what they can and that is the only obvious route left.”

Smedley believes its shareholders will pick up the pieces post-administration and will look to shrink the already depleted store portfolio. However, it is dubious what relevance a sub-150 store chain will have for the big brands, from which JJB is vying to secure exclusive, differentiated products.

Reducing the estate will also be an unpopular move with landlords, who have put up with two CVAs from the embattled retailer.

JJB Sports’ problems are deep-rooted and mass store closures, multiple management teams and shedloads of investment have yet to solve them. It needs differentiated product if it is to be seen as the performance sports specialist it claims to be and a marked improvement to its dilapidated store estate. So although an administration may secure its short-term future, its long-term survival is still as perilous as ever.