Embattled sports retailer JJB Sports said it needs funding more quickly than expected to tackle the tough trading conditions and is in discussions with its “strategic partners” about raising capital to fund its turnaround.
As group like-for-like sales slumped 8.7% in the 24 weeks to July 15, JJB Sports said: “The level of future headroom on working capital facilities and financial covenants will be significantly reduced in the short and medium term.
“This is likely to accelerate the timing of the additional funding required, which is dependent upon the trading performance of the business and the successful implementation of the management initiatives.
“Given the potential requirement to accelerate funding to implement the turnaround, the Group is in discussions with “strategic partners”.”
As it revealed earlier this month, JJB Sports said it had been hit by a “deterioration in trading performance against management expectation”. It said performance in May and June was particularly poor due to dampened sales of football replica kits and product associated with Euro 2012, as well as the wet weather.
As a result, sales and cash margins have fallen 16.6%, “materially short of expectations”.
JJB reiterated that there are “material uncertainties facing the business”, including the ability to implement its business recovery turnaround strategy “in light of the macroeconomic environment and the Group’s stock profile”.
JJB said: “In light of the deterioration in trading, the Directors have sought to implement a combination of management initiatives, which were identified in the 2012 Results, and have been successful in mitigating the trading and cash shortfall to a certain extent. However these actions have not fully mitigated the shortfall.”
It added that as a result it would need funding sooner than expected.
Bob Corliss, who was appointed as deputy chairman/chairman elect with effect from July 9, said: “There is a lot of work to do, and we have hit the ground running.
“We are continuing to work collaboratively with our business partners to address the challenges faced by JJB. I am excited to work with a brand that has a strong heritage in such an important market.”
The retailer said the timing of its refurbishment programme may also be hit. JJB has refitted five stores this year, which it said have shown an increase in sales and cash margin compared to the rest of the core estate of 22 percentage points and 23.4 percentage points respectively.