RNS Number : 0205I
JJB Sports PLC
19 July 2012
JJB Sports Plc
JJB Sports Plc ("JJB" or the "Group") will today give the following update at its AGM.
As announced on 9 July 2012, since the beginning of April the Group has experienced a deterioration in trading performance against management expectation, particularly during May and June owing principally to poor sales of football replica kits and product associated with the European Football Championships, exacerbated by the poor early summer weather. Consequently, as previously indicated, sales and cash margins have fallen materially short of expectations.
Group like for like sales for the 24 weeks ended 15 July 2012 decreased by 8.7% and cash margin decreased by 16.6%. As at 18 July 2012 net bank debt was £17.7m.
The Group has refitted 5 stores this year which have shown an increase in sales and cash margin compared to the rest of the core estate of 22.0 percentage points and 23.4 percentage points respectively in the post refit period. While the results of the refurbishment programme to date have been encouraging, in light of the deterioration in trading the Board is reviewing the timing of the refurbishment programme, while also continuing to work with its key strategic partners to refine the refit design and scope.
In addition to the net bank debt of £17.7m as at 18 July 2012, the Group has also drawn down £1.1m under the trade loan facility (details of which are set out in the circular published by the Group on 4 April 2012).
Impact of trading on future financing
At the time of the publication of our audited results for the 52 week period ended 29 January 2012 ("2012 Results") on 4 April 2012 the Directors recognised that there were material uncertainties facing the business which included the ability of the Group to continue to implement its business recovery turnaround strategy in light of the macroeconomic environment and the Group's stock profile.
These factors were seen as critical to the achievability of the Group's business plan, and were vital in maintaining sufficient headroom on its working capital facilities and financial covenants, but also important in determining the additional funding which had been expected to be required in the first quarter of 2013.
In light of the deterioration in trading, the Directors have sought to implement a combination of management initiatives, which were identified in the 2012 Results, and have been successful in mitigating the trading and cash shortfall to a certain extent. However these actions have not fully mitigated the shortfall. As a consequence, and in light of the continuing poor macroeconomic environment, the level of future headroom on working capital facilities and financial covenants will be significantly reduced in the short and medium term. 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 conjunction with these discussions, Bob Corliss, who was appointed as Deputy Chairman/Chairman elect with effect from 9 July 2012, is working with the management team to review ways in which the group's trading performance can be improved both in the short and medium term. Mr Corliss has significant retail experience and, in particular, has worked extensively in the sporting goods segment.
Mr Corliss stated:
"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."
For further information, please contact:
JJB Sports plc
020 7379 5151
020 7260 1000
A copy of this press release can also be viewed on the JJB Sports plc corporate website, www.jjbcorporate.co.uk.
JJB Sports plc (JJB: LSE) is one of the UK's leading sports retailers. The Group is headquartered in Wigan and listed on the AIM, trades from over 180 JJB branded retail stores in the UK and Ireland and employs over 4,000 people. Further information about the Group can be found on the Group's corporate website, www.jjbcorporate.co.uk.
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