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JJB cuts losses and prices

Discounting leads to share price drop despite improved half-year trading

Published on September 28th 2010.

JJB cuts losses and prices

Wigan-based JJB Sports saw increased turnover and reduced losses in its latest set of healf-yearly results, but has been forced to cut prices since the summer.

Its discounting policy has led to a fall in its share price despite a 14.4 per cent increase in like-for-like sales in the 26 weeks to the end of July.

Turnover increased to £184m for the first half of 2010, compared to ££167.3m for the same period in 2009. It reduced its operating loss to £22.5m, compared to £42.5m the previous year. The firm;s share price dropped by 11.4 per cent to to 9¾p, however – the level since May 2009.

Keith Jones, who took over as chief executive of JJB Sports in March, said the turnaround of the company would not be a ‘quick fix’ and would take up to three years to deliver.

“These results to 1 August 2010 reflect a period of steady progress towards that goal,” he said. “Since the half year-end, sales have been more volatile. We have consequently taken further steps to drive autumn and peak season sales through increased promotional activity. This is with the continuing strong support of key supplier partners and our bankers, who have agreed that the EBITDAR covenant will not be tested in October to provide us with the flexibility to implement our plans.”

The firm has also put together a new board, recruiting Paul Mitford as HR and training director, Kate Hayes as trading director and Debbie Robinson as marketing director.

“In the short-term our new sales management and promotional activities will drive our performance to year end,” said Jones. “We now have the senior management team in place to develop plans and initiatives to deliver the next phase of recovery.

“Although there remains much to be done, I remain excited by the size and nature of the opportunity for the business, and confident in management's ability to deliver that opportunity."

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