To many, JJB's demise has been on the cards for years now, but for some inexplicable reason a host of so-called smart investors, including the likes of Microsoft founder Bill Gates, have repeatedly ploughed funds into the ailing business. But even these generous souls have balked at yet another cash injection for a business which continues to see sales and margins falling in a brutally tough consumer environment.
When recessions hit, the weakest tend to fall first and JJB’s retail offering has long been considered one of the weakest on the high street and that was before founder Dave Whelan cherry picked the best stores for his own sports retailing venture. The company has repeatedly turned to investors for funds since it restructured through a Company Voluntary Agreement 18 months ago. In the first half of last year, the company raised £96.5m and then in April of this year it tapped investors for another £30m to give its stores a makeover. But this appears to have failed to spark a turnround in fortunes and the funding is drying up again.
JJB may appeal to an overseas buyer looking for a cheap entry into the UK market, but selling such a proposition in the midst of recession is going to be tough. And with the business already carrying significant debts, including to US investor Dick’s Sporting Goods, shareholders are going to be at the bottom of a long list of creditors when it comes to divvying out whatever proceeds a sale makes. This leaves some highly rated investors, including Invesco Perpetual, the Bill and Melinda Gates Foundation, Harris Associates and the Crystal Amber fund facing potentially embarrassing losses.
