Less than two years after rising from the ashes of a Company Voluntary Agreement, and after the injection of more than £100m in further shareholder funds, the sadly inevitable demise of JJB Sports (JJB) has been confirmed with the placing of the business into administration.
Although this makes a sale of the business or its constituent parts much more likely, it confirms what investors were told at the end of last month – that they were not going to see any value for their paper. And those shareholders left seriously out of pocket include well-regarded names such as Invesco Perpetual’s Neil Woodford, US investors Harris Associates and Dick’s Sporting Goods, the Crystal Amber fund and Microsoft founder and multi-billionaire Bill Gates’s foundation.
JJB is a sorry tale both for the management who thought they could turn around a business which had been hobbled by the recession and picked apart by founder Dave Whelan at its previous administration, and the investors who threw another £96.5m at it last year and a further £30m this April. Now, with the company in administration, it will probably be further picked over either by a buyer who will take the whole business and restructure it or by a number of buyers who will cleave off the parts of the business they want. Names in the frame include Sports Direct Group (SPD) and Irish conglomerate Stafford Group.
The demise of JJB leaves Sports Direct as pretty much the king of the high street in terms of sports retail. It was derided upon its stock market flotation in 2007 as a plaything of owner Mike Ashley which did not want to conform to the requirements of being a public company, but its trading performance through the recession has been exemplary and it now comes across as one of the best run retailers out there.
