JJB Sports made a pre-tax loss of £181.4 million last year. JJB has warned the market that it is not confident that a recovery will come any time soon.
JJB Sports was very close to going into administration in 2010 after it incurred costs of over £100 million.
JJB chairman Mike McTighe has indicated that recovery will take up to 5 years. They have received funds to aid its recovery, with shareholders providing £96.5 million.
JJB is likely to restructure its business and realign its assets. It is expected that around 43 loss making stores will close and a further 46 stores are under review and may be closed down. 18 stores have already been closed in 2011.
JJB have announced plans to invest in a new product-range and bring in new staff training methods to bring some life back to the now faded sports clothing brand.
Placing and Open Offer
JJB Sports have raised the additional funds by way of a placing of new shares and an open offer to shareholders to take up new stock in the business. Many shareholders felt confident that the brand is worthy of a longer term investment.
Hostile Takeover Bid By JD Sports Collapsed
Earlier in the year high street sports rival JD Sports was on the cards to make a hostile takeover bid for JJB Sports. However, the talks collapsed as JD Sports decided to abandon its plans after a breakdown in communication. The Guardian newspaper reported that JD Sports cited the reason for walking away from negotiations was due to the “unwillingness of its (JBB Sports) management to give it access to certain commercial information“.
In March JBB Sports shares had fallen to 13.25p after the takeover talks collapsed. Today (25th May 2011) their shares are trading at 24.12p, but are down 8.11% today on the back of this news.