JJB Sports has received a £30m injection from investors including Dick’s Sporting Goods as it posts a full year pre-tax loss of £101.1m
US sportswear giant Dick’s, which has over 500 stores in the US, is to invest £20m in new shares and convertible loan notes, and has the right to invest a further £20m in loan notes.
Investment firms IAML, Harris Associates, Crystal Amber and BMGFT - the firm’s four largest shareholders – have also invested an additional £10m into JJB.
JJB Sports said the alliance gave it the opportunity to “draw on Dick’s experience” in the sports retail market. At least one representative from Dick’s is expected to join the JJB board.
Adidas has also agreed to provide JJB will a loan of up to £15m to invest in its store transformation programme.
The retailer plans to accelerate this programme ahead of the UEFA Euro Championships and the London 2012 Olympics as its revamped stores have shown a “strong performance”.
JJB chief executive Keith Jones said: “We believe this investment package and strategic alliance with Dick’s will provide a real opportunity to accelerate JJB’s turnaround.”
In its full year to January 29, JJB’s pretax loss was cut by 44% from £181.4m to £101.1m. The figure includes a one-off £47.2m exceptional charge.
Sales for the year dropped 21.7% to £284.2m as a result of the store closures following its second CVA last year. It has closed 41 stores so far.
Like-for-like sales plunged 13.1% over the year, however, the decline has slowed in its current year. In the nine weeks to April 1 like-for-likes dipped 5.7%.
However like-for-like gross margin has plummeted 24.9% in monetary terms over the nine week period.
Jones said: “We have always said that the turnaround of JJB was never going to be easy or quick, and the current retail environment has made our work even more difficult.
“But we have made significant progress since our restructuring in April last year. With the financial and commercial support we are announcing today, we can go further and faster and take advantage of the tremendous opportunities we see in our market in 2012 and beyond.”
JJB’s lender Bank of Scotland has also agreed to extend its existing facility.