JJB Sports up for sale [Update]

It has long been a rumour but a for sale sign has finally been hung outsider JJB Sports after the chain failed to find the funds to revamp its stores.

The firm has seen its sales deteriorate through a combination of bad weather and a weak demand for replica football kits. In fact, in the six weeks to 26 August, like-for-like sales had fallen by 3.3 per cent.

In a bid to turn things around, the firm announced plans to invest £30 million in the business earlier this year. This included £20 million from US retailer Dick's Sporting Goods and £10 million from existing shareholders.

Unfortunately, earlier this month shares in JJB sank by a quarter after Dick's stated that it has effectively written off the entire investment.

As statement from JJB announced the sale: “The directors do not believe that the company will be able to raise the level of funds required to implement the turnaround. As a result, the board has decided to conduct a formal sale process of the company.”

The firm has debts in the region of £36 million and its sale will be led by David McCorquodale, corporate finance partner at KPMG.

Update 17th September, 2012: Sports Direct is very likely to purchase a chunk of the best-performing JJB stores in a pre-pack deal that will be announced this week. If the deal comes off, the remaining unwanted stores are likely to be closed down, resulting in many thousands of jobs being lost. Investors that would lose out include Invesco Asset Management, Harris Associates and the Bill & Melinda Gates Foundation. Any deal would almost certainly require the approval of the Office of Fair Trading.

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