JJB Sports said last week that it was exploring “further business restructuring options” and considering alternative sources of financing due to recent poor sales that will probably lead the British sports retailer to breach its bank covenants when they come up for review at the end of January.
The conditions relate to a revolving credit of £25 million (€29.6m-$39.4m) by the Bank of Scotland. JJB said it was actively engaged in constructive discussions with the bank and its advisers in relation to the testing of the financial covenants and the future financing of the business.
JJB pointed out that business conditions in the U.K. have been “extremely challenging” and sales have remained below forecast since it provided its latest trading update on Nov. 11, partly due to freezing weather in the U.K.
JJB reported at the time a 13.1 percent increase in comparable store sales for the six weeks ended Nov. 7, but warned that they had been lower than anticipated. The gross margin for the period fell by 6.8 percentage points to 33.8 percent due to promotions in a softening market environment. The company added that it was looking at the Christmas selling season to determine the results for the year.
