JJB to axe 800 jobs as profits collapse by 72%

Apr 17 2008 by Karen Dent, The Journal

A DRAMATIC drop in profits will see JJB Sports axe 800 jobs with the closure of 72 stores. The sportswear retailer has more than 400 outlets in the UK including shops and health clubs in Newcastle, Sunderland, Washington, Gateshead, South Shields, Wallsend, North Shields, Durham and Darlington.

The grim news came as the Wigan-based company revealed its adjusted profits fell by 28% to £33.8m in the year to January 27. The closure programme – expected to be completed by the end of the month – will cost a further £25m, which meant bottom-line profits fell by 72% to £10.8m.

JJB said it could not provide a definitive list of the shops that would shut, even though it began implementing the closure plan earlier in the year when new management started a review of the business. It has earmarked for closure those older, smaller stores which are near new, larger outlets and which it believes are unlikely to make any “significant contribution” to boosting profits.

A spokesman said 1,200 jobs would be affected in total – 800 people would be made redundant while 400 would be offered relocation to other JJB outlets.

As a major seller of replica football kits, JJB has been hit hard by the failure of all the home nations to reach the finals of this summer’s Euro 2008 tournament. Sales of England related merchandise fell by £23.4m in 2007, compared to 2006, which was a World Cup year. Chairman Roger Lane-Smith said: “While we have identified a number of stores for closure, which will itself strengthen our remaining store portfolio, we are also investing to improve the quality of our stores and product with further store refits, the introduction of new products from our own brands and the implementation of staff training and incentivisation programmes.”

Chris Rennie, who was appointed chief executive in the summer and used to work for Newcastle United owner Mike Ashley’s Sports Direct company, will oversee the changes.

JJB’s results were published against a worsening picture on the high street. Monthly figures from the British Retail Consortium this week revealed a sharper than expected fall in retail sales during March.

However, the owners of JJB’s rival sportswear retailer JD Sports – in which Mike Ashley has a 10% share – bucked the downward trend by announcing that annual profits jumped by 103% to £356m. It is much less reliant on replica kit sales than JJB.