As embattled retailer JJB Sports seeks a sale, spare a thought for its staff.
As the embattled retailer seeks a sale, spare a thought for its staff.
On December 29, 2008, as I was walking across the car park at the JJB head office in Wigan, I was approached by the HR manager, who asked: “You have come to help save the business, haven’t you Peter?”
It was my first day at JJB, having been appointed to the board to restructure a company that had breached its banking covenants and was in financial distress.
Weak management, poor financial controls, an unclear consumer proposition and a succession of bad strategic decisions were combining even then to threaten the very existence of the business. Stores that were supposed to be “serious about sport” were selling Hello Kitty and Thomas the Tank Engine merchandise. I had never seen a business in such disarray.
During my time with the company, we sold the JJB gyms business; put two loss-making companies, Qube and Original Shoe Company, which had only recently been acquired, into administration; dismissed the chief executive; replaced the chief finance officer; approached the Office of Fair Trading over concerns about certain competition issues; conducted a CVA to jettison 140 stores (the first for a public company); and negotiated rollovers of the standstill arrangement for our banking facilities on four separate occasions and then set up new bank facilities. All completed in the space of just 21 weeks.
Since the middle of 2009, there has also been a series of new equity capital injections and a further CVA, but still JJB struggles to survive. Why has all of this been in vain?
As consumers, we will freely spend money on our hobbies and those aspects of our lives that we feel passionate about – whether it’s a replica football shirt or the latest Kjus ski jacket.
From a consumer perspective, the sports retail offering in the UK seems fractured and incomplete. JD Sports, with an excellent footwear offer and an apparel proposition deliberately pitched at sports fashion – the clothing we wear to the wine bar to talk about sport – is well executed.
Sports Direct, with its emphasis on discounts and low prices, dominates the lower end of the market and is very successful. There are a number of specialists focused on specific sports, such as Snow+Rock, CycleSurgery, there is the sports department in John Lewis and independent retailers.
Why don’t we have an authoritative national store chain for sports participants like Decathlon in France or Dick’s Sporting Goods in the US? Does the dominance of Sports Direct make it impossible?
By the time you read this article, the outcome for JJB may have been decided. Perhaps JD will have acquired the name and a limited number of stores. Decathlon may take the larger stores to broaden its UK coverage.
But while all the corporate posturing goes on, spare a thought for the HR manager and his 4,000 colleagues who work for the company. Their livelihoods depend on some sort of positive outcome, and they are all innocent of the corporate turmoil that has led JJB to this place.
JJB Sports collapses as Sports Direct acquires 20 shops
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