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JJB Sports has put itself up for sale
and warned its shares may be worthless after the struggling retailer
failed to secure a fresh funding injection from investors. The shares
immediately fell 71 per cent to 0.67p.

JJB has long  been on the C@W no-no, don’t touch list. The company has been bailed out, restructured, refinanced, remodeled and rebuilt many times in the last few years. Its had two company voluntary arrangements already.

Nothing has worked. The glory days when an England squad even taking part in the Euro’s soccer tournament or Manchester United beating Arsenal were enough to sell a million replica strips are long gone.

Rival sportswear chains JD and Sports Direct are much more successful. Sports Direct is +46% on its share price this year. JJB is -97.95%. JD likes to move in the higher end of the sports brand market, taking a higher margin. Sports Direct like to bottom feed, volume selling cheap goods. And Sports Direct is quite a bit cheaper than JJB. And its been pouring cash and brains into its online offer and is doing very, very well there too. And Sports Direct very recently pinched JJB’s contract to supply, design and retail Rangers FC merchandise after the JJB arrangement was cancelled after Rangers went into administration.

US sporting store giant Dick’s, an investor at JJB, recently put £20
million in to the company. That wasn’t enough to make the turnaround.

JJB is down 3.3% on August like for like figs. This August most larger shops should have seen a boost in sales. Big sports shops particularly. 

A boost from the 2012 Olympics itself and the relaxation of Sunday trading laws. And 2011 August sales were nothing to get excited about, being down -0.5% on 2010. If you can’t get ahead during August 2012, then you’re not going to make it.

The Capitalists@Work ‘Woolworths’  test is now complete. As sales have fallen so have margins. Borrowing has increased. Investment is scarce. Support staff are axed. Training lapses, staff numbers fall, service declines, inventories shrink, refurbishments cease, image decays. Stock suppliers begin to seek alternative retailers. Shoppers scale back and then search for cheaper alternatives. They find others are doing it better.  Investors panic…

If the recession isn’t quick the money required to repair all those negatives will never be found.

This recession has been deadly and JJB has never really looked like they were going to make it in their current form.

2012-08-31 00:33:16

Source: http://www.cityunslicker.com/2012/08/the-squeezed-middlemarket.html