JJB Sports' turnaround hopes have been dealt a blow after the retailer failed to receive the boost it expected from the Euro 2012 championships.
The Wigan-based group, which came close to collapse last year before striking a partnership with American retailer Dick’s Sporting Goods, suffered an 8% fall in like-for-like sales in the 22 weeks to July 1.
This marked a deterioration on the 5.7% decline in its first quarter as it failed to enjoy the normal sales uplift ahead of a major football tournament, while the wettest April and June on record further dampened demand.
The group also announced that Mike McTighe will step down as chairman in September after “20 intense months”. He will be replaced by retail turnaround specialist Bob Corliss, who previously ran The Athlete’s Foot, a franchise-based footwear business.
Shares were down more than 25% yesterday after the company’s warning about poor sales of replica kits in the run-up to Euro 2012.
Seymour Pierce analyst Freddie George does not expect JJB to break even until the 2015 financial year at the earliest and said more investment may be needed on top of the £30m already offered by Dick’s and other suppliers.
JJB had hoped store overhauls would start to bear fruit in time for the Euros and the Olympics.
George said: “To date there is no evidence that the company has found a niche in sporting goods and a format which is differentiated from its competitors.
“There must now be question marks over the refurbishment programme.”
JJB made losses of £101m in the year to January and Mr George expects pre-tax losses of £32m in its current financial year.
The company, which trades from 180 stores and employs 4,000 people, has been hit by competition from high street and internet rivals including Newcastle United owner Mike Ashley’s buoyant Sports Direct International.
Corliss, who has been appointed to further accelerate the company’s turnaround, said: “JJB has been through some difficult times yet it is clear that there is a real market opportunity for a national authentic sports retailer here in the UK.
“JJB can be that retailer and I’m energised by the prospect of leading the company through the next phase of its turnaround.”
Last year, JJB was forced to secure £96.5m in funds from major shareholders, as well as announce plans to close 43 unprofitable stores and place a further 46 on review in a bid to stave off administration.
Dick’s which has more than 500 stores in the United States, agreed to invest an initial £20m alongside £10m from existing shareholders, such as the Bill and Melinda Gates Foundation.
JJB said £20m of the funding would go towards converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much-improved sales and margins.