JJB Sports has reported like-for-likes fell 13.5% from January 24 to March 13 as it issues its revised business plan and proposed financial arrangements.
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Total group sales for the period were down 14.6%. JJB said management’s expectations for the full year remain unchanged and it has been achieving its internal expectations in relation to trading.
The retailer wants to raise £65m by a firm placing and open offer. JJB has agreed 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. Other shareholders or institutions will also be invited to participate, led by Numis.
JJB said the performance of its six transformed stores continues to be “very encouraging”, with sales up 16% above the company average.
The business plan includes axing some stores through its proposed company voluntary arrangement (CVA), invest in the store portfolio through three levels of store and proposition development – retail basics, refresh refit and full transformation.
Retail basics includes improving retail disciplines such as stock selection, buying, allocation, replenishment and clearance markdown management. It said this will enable JJB to align stock packages to type of store, improve stock availability and clear old stock. This will cover approximately 133 stores, and it wants to invest approximately £4.4m in the 2012 financial year with a two year payback targeted.
Refresh refit is aimed at remixing the store space and improving the customer experience with new signage, and a focus on footwear departments. This will cover approximately 14 stores in 2012 and 27 stores in 2013, and JJB wants to invest approximately £1.4m the first year, then £2.7m the second year.
Full transformation will cover 22 stores in 2012 and 28 stores in 2013 with the shops being revamped in line with its existing six transformed stores. It includes new fixtures and fittings, mezzanines where appropriate and improved navigation. It will invest £6.1m in 2012 and £7.8m in 2013 and a payback of between three to five years is targeted.
JJB also plans to spend £2.5m in 2012 and £2.3m in 2013 for general capital programmes such as maintenance and IT, and website development.
It wants to continue to source new ranges including exclusives from suppliers, and develop exclusive branded products such as Run 365 and Slazenger Golf.
JJB wants to focus on training, improve the multichannel proposition, and exploit efficiencies in warehousing and distribution, stock management, store wages and sales management.
JJB has said it expects internet sales to grow by around 20% per annum from approximately £11m in 2011. It is targeting like-for-likes in the 2012 financial year to grow in the low single digits. By 2014 it is targeting like-for-likes to be in the high single digits and the new business model to be established.
JJB is also targeting improved retail gross margin of approximately 45% in 2014, and further progression thereafter.
JJB will only launch its proposed capital raising if the CVA is approved. It has also reached an agreement with the Bank of Scotland for the provision of a working capital facility of £25m through to May 31, 2014.
JJB chairman Mike McTighe said: “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.”