Page last updated at 18:17 GMT, Wednesday, 14 January 2009

JJB set for loss as sales slide

JJB Sports sign
JJB is looking to sell its Fitness Clubs business

Retailer JJB Sports has said it may be heading for a full-year loss of up to 10m after seeing sales fall in "extremely difficult" trading.

JJB has been hit by an estimated 15m loss at its Lifestyle division, which includes the Original Shoe Company and Qube chains, in the year to 25 January.

The firm also said like-for-like sales, excluding the Lifestyle division, over the festive period were down 6.8%.

JJB said it had started a comprehensive review of the business.

Banks 'supportive'

While group like-for-like sales - which are sales in stores open for at least one year - had fallen over the five weeks to 11 January, the decline masked contrasting fortunes for different areas of the firm.

Revenues at JJB's health clubs were up 8.4% in the five-week period, whereas they were down 8% at its retail stores.

JJB said that an information memorandum for the sale of its Fitness Clubs business would be released to "a number of interested parties" in the next few days.

It also said it was "considering its options" regarding its Lifestyle division.

JJB said it expected its net debt to be just under 60m by the end of the year, in line with market forecasts.

"The banks remain supportive of the company and constructive discussions are continuing with a view to agreeing a basis for providing ongoing support," it said.

JJB said it was now expecting to report a loss of between 5m and 10m for the year to 25 January.

Sir David Jones, executive chairman of JJB, said: "We have started a comprehensive review of the business - including product offer, store layout and operating systems.

"This is an essential part of the plan to re-establish JJB as a major force in the sportswear market.

"We are under no illusions that this is a very difficult task in the present retail environment, but we are determined to succeed."

Share stake

Shares in JJB fell 2.5 pence, or 18.2%, to 11.25p on Wednesday, following the release of the trading update.

As well as the trading update, the firm's shares were also hit by news that a 27.5% stake in the firm, which had been held by JJB chief executive Chris Ronnie, was now held by the administrators to the UK and Isle of Man units of Icelandic bank Kaupthing.

The administrators took control of the stake that had been held in a joint venture, Guro Leisure, which had been formed by Mr Ronnie and Icelandic financial group Exista in 2007 to buy the stake from JJB's founder, David Whelan.

Panmure analyst Philip Dorgan said this was "clearly not helpful" for the share price.

"However, we believe that the most important driver for the shares over any reasonable timescale will be further news on asset disposals," he added.

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