JJB Sports faced a dramatic showdown at its AGM in Wigan last week when representatives of Sports Direct founder Mike Ashley, who has been embroiled in a loan row with JJB chairman Sir David Jones, turned up to question the board on its stock position.
JJB has struggled to replenish stock after suppliers became nervous when the retailer began renegotiating with its banks to secure its future and had no credit insurance.
Jones said at the AGM that he will not take stock from Sports Direct any more, an initiative used by disgraced former JJB chief
executive Chris Ronnie. “The vast amount of stock Ronnie had is
not what I have in mind for the future of the company,” said Jones. “The JJB customer is not the Sports Direct customer.”
This stance means that JJB is unlikely to see an improvement to trading until the last quarter of 2009.
Stockholding in JJB’s retail business is 57.7 per cent lower than at the end of the same period last year. Retail revenues for the 25 weeks to July 19 were 40.4 per cent lower than the same period last year.
Jones added: “We have a clearly defined product policy. As the months go by stock levels will improve and customers will see that we are back in business.”
Despite stock issues and the ongoing scandal surrounding the Ashley loan – which has now been repaid – shareholders voted almost unanimously in favour of
JJB Sports has also strengthened its board with retail heavyweight and former Dixons and DSGi boss John Clare, as Jones declared his intentions to become part-time chairman when a new chief executive is found for the sports retailer.
Jones said: “All I want to do is get on and do the job for the benefit of the shareholders and the employees, not the competition.”
Seymour Pierce analyst Kate Heseltine said that there were some positive signs for the company’s future. “Encouragingly, the £25m short-term loan facility with Barclays has been repaid in full and ahead of maturity on August 31 using deferred consideration from sale of the gyms.”
She added that the sale of non-core assets and equity fundraising – under consideration by management – was increasingly likely.
She retained a pre-tax loss forecast of £18.9m for JJB’s current year and expects it to turn a profit by its full year to 2012.