JJB Sports has entered talks with its “strategic partners” after a wet start to the summer and a weak Euro football championship hit sales, raising alarm bells over the company’s finances.
Like-for-like sales for the 25 weeks to 15 July were down by 8.7% and its cash margin decreased by 16.6%.
As at 18 July, net bank debt was £17.7m.
In a trading update released today, the company said that a series of management initiatives designed to mitigate the tough trading environment had failed to fully make up the shortfall.
As a result, it said, the future headroom on working capital facilities and financial covenants “will be significantly reduced in the short and medium term”.
The company said: “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 its strategic partners.”
In addition to the net bank debt of £17.7m, JJB has also drawn down £1.1m under the trade loan facility.
Management has previously warned of the tough outlook facing the company, saying at the time of its results on 4 April that it expected to draw on the additional funds required by the first quarter of 2013.
As well as entering talks with funding partners, the group has decided to put its refurbishment programme on hold and “refine the refit design and scope”.
Bob Corliss, who became deputy chairman on 9 July, is now leading a management review of the company’s trading performance.
He 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.”
jack.sidders@estatesgazette.com
