Creaking JJB Sports passed fit for extra time

Tue Mar 22, 2011

HUGE LOSSES

JJB can now press ahead with plans to revamp stores, financed through a proposed 65 million pound equity fundraising and a 25 million pound loan agreement with Bank of Scotland (LLOY.L).

JJB

These plans were dependent on the CVA being approved.

Shares in JJB, which prior to Tuesday had lost 93 percent of their value over the last year, were up 8 percent at 28 pence at 1457 GMT, valuing the business at about 36 million pounds.

"The big sports suppliers (such as Adidas (ADSGn.DE) and Nike (NKE.N)) want JJB to survive, to avoid the industry being dominated by Sports Direct (SPD.L), but it is not clear that consumers are that bothered, given how badly the business is trading and the huge losses being incurred by JJB," said Arden Partners analyst Nick Bubb.

Analysts forecast the group made a loss before tax and one-off items of 42.5 million pounds in the year through January, according to Thomson Reuters I/B/E/S data.

Several store groups have been critical of CVAs, which have been used by struggling retailers such as outdoor goods group Blacks Leisure (BSLA.L) and do-it-yourself firm Focus, arguing they advantage weak companies and give them an unfair advantage over good businesses that honour their lease obligations.

"The idea that this CVA thing saves jobs is ludicrous. What it is, is postponing and dragging out a process that needs a much faster recycle," said Ian Cheshire, Chief Executive of Kingfisher (KGF.L), Europe's biggest home improvement retailer, at last week's Retail Week conference.

(Editing by Will Waterman and Jon Loades-Carter) ($1=.6103 Pound)

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