The City gives its verdict on JJB’s sharp sales plunge.
“To date there is no evidence that the company has found a niche in sporting goods, and a format, which is differentiated from its competitors. There must now be question marks over the refurbishment programme.
“However, we see limited downside in the stock, because of the involvement of US group Dick’s Sporting Goods, which has invested £20m in the business. It does appear likely though that the company, in view of the losses forecast, will require further investment in the business.” Seymour Pierce analyst Freddie George
“The wettest ever April to June period has taken its toll on JJB. This has been compounded by the poor performance of replica kit sales during Euro 2012. We are downgrading our forecasts as a consequence, although the long term story should not be materially affected. After the most recent fundraising, JJB now has the funds to achieve a much higher level of profitability, but it will take time to move into the black.
“We are cutting our forecast for a pre-tax loss for the year from £37m, to a loss of £48m. For FY2014, we are cutting from -£8.3m to £-16.3m and for FY2015, from £19.4m to £10m. Today’s profit downgrades should not change the long term opportunity.” Panmure analyst Philip Dorgan
“Considering that this year is one of the most significant in the sporting calendar for a generation, JJB’s numbers are extremely disappointing – all the more so as they demonstrate a marked deterioration in trading since the last update. The younger age segment that JJB serves is also under severe financial pressure with many younger consumers finding it difficult to secure jobs. While this is a longer-term factor, it is likely to have contributed, at least in part, to the current softening of numbers.
“A tougher competitive dynamic must also be considered. The expansion of specialists such as Go Outdoors and the continued impressive performance of promotionally driven Sports Direct have both played a part in eroding JJB’s sales. The challenge now is for JJB to try and capitalise on other sporting events, especially the Olympics.” Conlumino managing director Neil Saunders
“If JJB Sports was making a profit, today’s trading statement would be called a profit warning…but losses will be mounting, as JJB has warned that since early April “sales have fallen materially short of expectations”. The bad weather gets a mention, obviously, but JJB also point to unexpectedly poor sales of Euro 2012 shirts etc, which implies that the likes of Sports Direct and JD Sports may have had a difficult time too in recent weeks.” Independent analyst Nick Bubb