JJB Sports reported that growth in own-brand goods and more exclusive tie-ups with other brands will help bring customers back into stores and improve margins as it battles to turn around after suffering heavy losses.
Pre-tax losses in the year to January 31 hit £68.5m and total sales slid 22.6% after a year of restructuring to bring the retailer back from the brink of collapse.
New chief executive Keith Jones said own-brand is down to 7% of JJB’s mix but he aims to more than double the figure, and that more exclusive deals with brands would be an important part of its offer.
Analysts believe that JJB is unlikely to return to profit within two years.
Singer analyst Matthew McEachran said JJB’s results were “slightly worse than the market expected” and cautioned: “Although progress has been made on
restocking, it has come at the expense of balance sheet flexibility, and the profile of stock isn’t right yet, creating markdown risk.
“There is still a lack of clarity surrounding the turnaround but this should improve, and the potential remains.”
Jones said that JJB was a three-year turnaround that is “not going to be quick and not going to be easy”.
John Clare has been appointed JJB’s full-time chairman to help his former DSGi colleague develop the retailer’s strategy.
Jones said that there is great potential to build JJB’s online business and development is under way to link its website and retail stock systems.
He added that a click-and-collect service will go live in the autumn. The retailer will also unveil a new-look store that may be rolled out if successful.
JJB’s trading has improved since the year-end. Like-for-likes rose from -2% in February to 19% in May and the retailer hopes for a further sales boost from the World Cup, which starts next week.
However, Seymour Pierce analyst Freddie George still has doubts about JJB’s prospects.
He said: “The market in sportswear retailing is likely to remain competitive and we have concerns on the longer term viability of the ‘Serious about Sports’ strategy.”
He added: “It will also be a major challenge to return the business to profitability.”