JJB Sports reports a decrease in profits |
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Sat, 16 Apr 2005 01:00
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It does not look like it is a year of good times. JJB Sports has had a very forgettable one what with profits going on a dive of about 30%. The sportswear retailer is seeking to void rumors of an immediate takeover as well. Private equity firm Cinven's bid had not gone through last October. Despite this, the speculation is that a takeover is imminent.
David Greenwood, JJB Sport’s finance director refuted rumors that chairman David Whelan plans to sell his family’s 40 per cent stake in the company. "There’s no substance in any of these rumors" Greenwood commented.
| JJB had issued a statement in January saying that sales fell 1.4 per cent in the six weeks in the Christmas period upto 2 January.
Whelan blamed the decreasing demand of the UK shopper and said that this was setting up intense competition in the retail sector, which meant that the markets were in turmoil. Whelan commented, "Trading conditions are as difficult as any I have known for some years."
JJB has announced a 28 per cent net decrease in underlying pre-tax profits to £63.7 million for the year to end January. JJB also said that the sales in its sportswear stores and leisure centers fell by 1.2 per cent in the 10 weeks to April 10.
Meanwhile analysts were quick to defend these figures, Rupert Trotter, fund manager at ISIS Asset Management had this to say, "It ties in with what is happening on the rest of the high street. It is quite clear that consumers have tightened their belt and that this is fuelling competition between retailers." He added that JJB had reduced its clothing stock by more than £20 million as a competitive measure, but this did hit its margins.
JJB is currently based in Wigan and boasts of 438 outlets, which include 189 out-of-town superstores and 123 smaller high street shops. Despite this setback JJB has a neat cash reserve that will see it through this crisis. JJB also plans to expand its 24 health clubs, to 39 clubs by January 2006.
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