JJB Sports, one of the major British sporting goods retailers, bought 61 Original Shoe Company stores from its rival Sports Direct last December, in a major diversification into lifestyle fashion. It followed up last May with the acquisition of 24 Qube stores from Sir Tom Hunter, who sold his Sports Division chain to JJB many years ago.
Chris Ronnie, a former executive of Sports Division and Sports Direct who became chief executive of JJB Sports with a financial stake in the company last year, wanted to set up a lifestyle division similar to that of that of the John David Group, recently renamed as JD Sports Fashion.
As its own sporting goods retail operations have been suffering a lot lately, precipitating a major drop in its share price, as reported in the last issue, JJB said it had been approached by a company about the sale of its shoe shops. Without confirming a rumor that JD Sports Fashion is the candidate for this acquisition, JJB said it was considering the sale of one or more of its non-core assets.
Meanwhile, JJB has taken a variety of measures to prop up its shaky financial situation, which led one of its credit insurance companies to withdraw its support. Among other things it has obtained £3.4 million (€4.3m-$5.4m) in cash through the private placement of 5 percent of its shares with Sports Direct, which has also signed contracts that allow it to raise its stake to 22 percent. Controlled by Mike Ashley, Sports Direct also has small shareholdings in JD Sports Fashion and in another British sporting goods retail group, Blacks Leisure.
In addition, JJB has also negotiated a new bridge loan of £20 million (€25.2m-$31.8m) and initiated discussions with other bankers with the aid of KPMG. Furthermore, the company has appointed a new deputy chairman, David Jones, who has served as chief executive and executive chairman of Next. He also acted as chairman of Littlewoods Shop Direct Group. Barry Dunn, group property director of JJB, has left the group
For its part, Sports Direct said it was anticipating its own underlying earnings to be in line with market expectations for the year, in spite of the toughest market conditions in the company's history.
