SPORTS retailer JJB Sports – once the biggest sports in Britain – has admitted defeat as it announced plans to appoint administrators.
Just five years ago, JJB’s shares were worth £10 a piece but yesterday the stock was suspended and remaining investors – including Microsoft magnate Bill Gates – will see their holdings wiped out.
The group will appoint KPMG as administrators in the next few days in a move that is likely to promote further debate over how it has been managed in recent years.
As many as half of its 180 stores are expected to close in a so-called pre-pack sale process once administrators are appointed, threatening a large number of the 4,000 jobs at the firm.
JJB’s story of dramatic rise and fall began when former Blackburn Rovers footballer and Wigan Athletic owner Dave Whelan bought a single store in Wigan in 1971 before an aggressive expansion drive saw it climb to more than 400 stores by 2007.
In 2007 Mr Whelan sold his family’s holding for £190m to a joint venture formed by Icelandic financial group Exista and Chris Ronnie, who previously worked at Umbro and Sports World owner Sports Direct.
The group was hit hard by the squeeze on consumer spending triggered by the financial crisis and by the stellar performance of rivals Sports Direct and JD Sports. By late 2008 it was in a battle for survival.
The group has been through six chairmen in the last four years, covering a period in which it also incorrectly applied VAT to children’s clothing, resulting in a £5m tax liability. And despite numerous fundraisings and closing half of its stores, it has been unable to revive fortunes.
Newcastle United owner Mike Ashley’s Sports Direct business is seen as favourite to pick up a large chunk of the business, although the number of stores will depend on the stance of the competition watchdog.
In a statement, JJB said: “The board has determined that any sale of the trade, assets and brands will be effected through an administration process.”
The original store was established by JJ Broughton in the early 1900s and was bought by JJ Braddock and then JJ Bradburn.
Mr Whelan, who had previously sold a discount store business to Morrisons founder Ken Morrison, maintained the JJB name and grew the business to 120 stores in 1994 when the company was floated on the stock exchange.
Its acquisition of Sports Division in 1998 made JJB the largest sports retailer in the UK.
But by the end of 2008, it had embarked on a major restructuring and refinancing. Its two loss-making leisure footwear brands, OSC and Qube, were placed into administration and the company sold its fitness clubs to Mr Whelan’s DW Sports for £83.4m.
JJB secured its most recent lifeline four months ago when it landed £20m from US retailer Dick’s Sporting Goods and a further £10m from shareholders.