JD Sports Fashion executive chairman Peter Cowgill has said that he plans to continue to run JJB Sports as a separate chain if he buys the business, and believes the JD management team can offer expertise to the struggling retailer.
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Cowgill said talks were at a very early stage but that if successful, he would not integrate the chains. JJB focuses on the mainstream sportswear sector, while JD sells a higher-end fashion-led sports offer.
Cowgill said no decision had been made on how the chain would run, but said: “Our management has a lot to offer to the equation.”
JD said on Wednesday that it was in preliminary talks with JJB about buying the business. JJB confirmed the talks and said it had received multiple approaches before Christmas but that talks were only ongoing with JD.
Singer Capital Markets analyst Matthew McEachran said JD could offer JJB a lifeline. He said: “If anyone stands a good chance of turning round the fortunes of JJB [JD] do. They [the management team] already have strong and established relationships with key brands Nike and Adidas, whose support is vital to the future of JJB.”
One source said an acquisition could give JD more buying power with top brands, but said those brands would still want two chains to sell in.
JJB is understood to have a market value of about £30m, and it has net debt of £21.3m. It has raised capital from shareholders to provide working capital until the end of April, but warned if trading falls below forecast it could experience a funding shortfall by the last week of March.
JJB’s like-for-like sales were down 11.1% for the period between December 20 and January 23. Year-to-date like-for-likes to January 23 were up 6.2%.