Trading crisis grows at sportswear retailer JJB
The trading crisis at sportswear retailer JJB has deepened as the embattled company warned sales continued to perform below expectations.
The group, which last year stayed afloat thanks to a restructuring deal with landlords, also warned heavy snowfall and freezing temperatures sweeping the country could further hurt performance.
The trading slump means JJB expects to breach certain financial covenants - an agreement between a company and a creditor that it should operate within certain limits - over a £25m Bank of Scotland loan.
It said it was engaged in "constructive discussions" with BoS about the breach, due at the end of January and the future financing of the business.
The group said since its last update three weeks ago conditions had "remained extremely challenging" and with just two months of Christmas and New Year trading remaining, the full-year outlook remains uncertain.
The Wigan-based retailer, which operates nearly 250 stores and employs more than 6,300 staff, recently revealed a major promotional drive, launched to protect its "Serious about Sport" turnaround strategy, had failed to deliver results.
JJB added that it was separately exploring further restructuring options and considering alternative sources of finance.
It did strike one positive note by reporting an encouraging performance in six recently refitted stores, with sales 11% above the company average between November 1 and November 28.
JJB's recent updates contrast with like-for-like sales growth of more than 20% in the run-up to the World Cup, when profit margins hit 44%.