By Rachel Rickard Straus
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JJB Sports shares plunged by 25 per cent after the sports retailer failed to receive the sales boost from the Euro 2012 championships it had hoped for.
Sales of replica football kits and associated products generated from consumer interest in the tournament simply did not materialise, it said.
This, combined with miserably weather, saw sales drop by eight per cent in the 22 weeks ended July 1. Net debt as of July 1 was ?15.4 million.
Not the result that was hoped for: Interest in the Euro 2012 games failed to generate the sales in replica kits that JJB Sport had anticipated
The decline follows a 5.7 per cent drop in sales in its first quarter, as wet weather dampened demand.
The Wigan-based group came close to collapse last year, before striking a partnership with American retailer Dick?s Sporting Goods, which has more than 500 stores in the US.
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The US company agreed to invest an initial ?20 million alongside ?10 million from existing shareholders, such as the Bill and Melinda Gates Foundation.
JJB said ?20 million of the funding would go towards converting 60 of its most important stores this and next year into a new format, which produced much-improved sales and margins during trials.
Sales decline: Poor weather curbed demand, with sales dropping by eight per cent in the quarter
The group announced today 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.
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 ?30 million 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, which had been seen as major opportunities for the sector.
Mr 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.?
Missed opportunity: England's Ashley Young misses a scoring opportunity in the Euro 2012 quarter-final against Italy last month. Sales of England replica kits have been smaller than anticipated
JJB made losses of ?101 million in the year to January and Mr George expects pre-tax losses of ?32 million 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.
Mr 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 ?96.5 million 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.
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