JJB Sports Plc said its first-half loss widened as it lacked enough inventory due to liquidity issues. But the U.K. sporting goods chain was encouraged by signs of improvement in its performance. The net loss from continuing and discontinued operations was £27.2 pounds ($36.6 mm) in the six months ended July 26, from a loss of £263,000 ($426,500) in the same period a year earlier.
Sales for the U.K. sports retailer declined 21% to £167 million ($224.8 mm).
The 250-store firm, which came close to administration earlier this year, also said it had agreed a further £10 million ($13.4 mm) of new financing with a relaxation of financial covenants.
Gross margin in the latest half narrowed to 34% from 48.7%. JJB said its restructuring efforts will allow it to rebuild inventories by the first quarter of 2010.
Sir David Jones, executive chairman of JJB Sports, said: “Today's announcement shows a marked decline in ongoing retail operations compared to the same period last year largely because of stock shortages in our stores during the period.
Although the retail environment remains challenging, we are encouraged by the early signs of improvement in like-for-like sales trends and gross margins in recent weeks,” the Executive Chairman David Jones.
stores during the period.”
JJB Sports earlier this year reported Sports Direct to regulators, alleging criminal price-rigging and fraud. The Office of Fair Trading (OFT) has begun an inquiry into anti-competitive behaviour between the two companies.
The OFT has given JJB immunity from financial penalties for blowing the whistle on its rival, but that grant does not automatically cover a parallel inquiry by the Serious Fraud Office (SFO).
JJB maintained this morning that it will not face fines from the SFO. “The company has contacted the SFO directly and the SFO has confirmed that its investigation is focused on the activities of certain individuals rather than the company,” Sir David said.
“The directors do not believe the company has committed any offences under the Fraud Act for which it could be prosecuted given its leniency status,” he added.
