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Desperate measures for JJB

Created:
25 November 2008
Written by:
John Hughman

Struggling sportswear retailer JJB Sports has received an offer for its 50 fitness clubs, with market rumours suggesting that JJB founder Dave Whelan - who sold his 29 per cent holding in JJB Sports for £190m in June 2007 - is willing to pay £100m for the gyms business.

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Meanwhile, rival JD Sports has purchased a 10 per cent stake in JJB, which means that competitors now own nearly a third of the company. JD is unlikely to mount a full-scale bid for the group, but is thought to be interested in carving out JJB's Original Shoe Company and Qube fashion chains, which JJB only acquired earlier this year.

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Sell

JJB needs to sell assets to reduce its crippling debt, but is being made to pay a high price. The fitness clubs are highly profitable, and JJB could be left with a poorly differentiated retail offering facing the worst trading environment for over a decade. At 33p, it remains a sell. 

Last IC view: Sell, 37p, 20 Oct 2008

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