JJB Sports shares plummeted 27% after news emerged that a credit insurer refused to cover the company’s suppliers due to the risk that JJB may be unable to pay them.
The BBC reports that Coface, the insurance company in question, has confirmed that it withdrew coverage about a week after JJB reported a 9.7 million ($13.2 million) loss for the trailing six month period.
Business credit insurance is a financial management tool used to eliminate the risk of a significant, unexpected credit loss resulting from insolvency or past due credit payments owed by the customer.
JJB last month reported a first-half loss, halted dividend payments and cut its goal for annual profit. Difficult economic conditions will probably last “through 2010, CEO Chris Ronnie said at the time. Shares of JJB have dropped 76 percent in 2008 after declining 48 percent last year.
