Struggling U.K. sports retailer JJB Sports has indicated the recent poor sales means the company is likely to breach some banking covenants. Management for the chain said sales have remained below forecast since the company last updated investors on Nov. 11 of this year.
Management added the cold weather in the U.K will likely compound the results, adding that the company is likely to fail a covenant test on a 25 million-pound Bank of Scotland loan facility at the end of January.
“At this stage, with two months of important trading remaining before the year end, covering the pre-Christmas and New Year sale periods, the outlook for the full year remains uncertain,” said JJB in its statement.
The company noted that at the time of publication of the company's half year results, the Group's forecasts did not show any funding shortfalls or breaches of financial covenants in the next 12 months, but as part of their going concern assessment, the directors highlighted the uncertainties inherent in the group's forecasts if future trading was “not in line with expectations.”
JJB also said it's exploring “further business restructuring options” and considering alternative financing sources.