JJB Sports battles tougher market
Founder disappointed by rejection of offer
July 11 2003
JJB Sport founder Dave Whelan has told shareholders he was ‘disappointed’ by the rejection of his offer to take the business private, but pledged his continued commitment to the sports and leisurewear retailer.
The company is also pulling out of four leases including one on London’s Oxford Street and one in Amsterdam, in order to focus on developing its profitable edge-of-town superstores.
In a statement issued for JJB’s annual meeting, the company also revealed a 3.4 per cent fall in like-for-like sales in the core JJB business for the 23 weeks to July 6. Total turnover was up 1.3 per cent. The TJ Hughes value retail business saw a 4.4 per cent increase in total sales with a like-for-like fall of 1 per cent.
Last month, JJB’s independent directors announced they would not recommend Whelan’s 220p-share offer for JJB, prompting the founder to withdraw the bid. Whelan said: “Whilst I was disappointed with this outcome to the offer it in no way affects my determination to continue to contribute fully to achieve the future success of JJB.”
Over the 23 week period, JJB saw margins halved by a sale aimed at clearing the previous season’s ranges. The company said the market continues to be challenging, particularly in children’s clothing, The like-for-like figures were also hit by comparisons with strong sales of replica football kits in the run-up to the World Cup last summer.
Operating costs were also 5.6 per cent higher than last year, due to the higher staffing levels of the superstores and health clubs opened over the last 12 months. JJB has 55,000 members across its 13 clubs. Six superstores have opened since February, with six smaller stores closed.
JJB now has 449 stores including 275 superstores, with 19 superstores scheduled to open, five of which will include health clubs.
Performance in the 39-store TJ Hughes business, bought by JJB to spread its exposure to fickle consumer tastes beyond the sportswear market, was hit by a trial of promotional activity which ultimately reduced turnover. In the 15 weeks since March 24, with promotional activity “returned to more typical levels,” total turnover was up 6.9 per cent higher with like-for-likes up 1.8 per cent.
Whelan said: “Whilst I am slightly disappointed by the levels of trade currently being attained, margins are holding up reasonably well. I also believe that comparisons with the previous year will become easier as the current year progresses.”
He said trading conditions will remain challenging, but the strategies implemented “and the strength of our core business will be of continuing benefit to our shareholders.”
