JJB's field of 2010 dreams

Sportswear retailer pins hopes on World Cup after underlying sales fall 29 per cent

The troubled retailer JJB yesterday laid bare the disastrous stock problems it has suffered in 2009, as it revealed that underlying sales for the half-year to last week had plunged.

However, it said it was confident it would receive a significant boost from next year's World Cup in South Africa.

The sports equipment specialist, whose 253 stores teetered on the brink of collapse earlier this year, also cited a recent improvement in its calamitous sales and vowed to have branches fully restocked from February.

Sir David Jones, the chairman of JJB, said: "Obviously, the stock [position] is better than it was three to four months ago, but it is still not what we really want."

JJB currently has stock worth £81m, just 19 per cent lower than at this time last year and an improvement on the £50m it had in July. The company's like-for-like sales at stores open for more than a year slumped by 29 per cent in the 20 weeks to 13 December. JJB has been hit by credit insurers scaling back cover for its suppliers, because they feared the company might go into administration earlier this year.

Sir David said: "The improvement in like-for-like sales will not show itself till late January, February and March."

Over the 20 weeks, JJB's underlying sales showed a smaller decline. They were down 27 per cent in September and October, and 21 per cent lower in November as stock levels increased.

But sales for the first three weeks of December were 32 per cent lower than the same period last year, which saw the start of a discount sale that lasted from 25 November 2008 to the end of March 2009.

Sir David struck an upbeat note on next year's World Cup football tournament, saying: "It will have a very significant impact. We are one of the biggest sellers of football and football-related products. We sold 10,000 more footballs in one month when England were last in a major tournament. It will benefit our sales by many, many millions."

Sir David tried to safeguard JJB's future by implementing three major restructuring measures this year. In March, JJB sold its fitness clubs division for £83.4m to Dave Whelan, the chain's founder. It then completed a company voluntary arrangement that enabled it to ditch 140 unprofitable stores. And at the end of October, it gathered £94m from a capital raising, part of which it used to pay off a £30.5m loan from Bank of Scotland. The rest is being kept for working capital, refurbishing existing stores and opening up to four branches by next summer.

JJB has hired Keith Jones, group retail director at DSGi, as its new chief executive and he starts on or before 1 March. Shortly after that, Sir David will become a part-time chairman. He said: "As soon as Keith has got his feet under the table, I will quietly fade away."

Sir David predicted that conditions in the UK retail sector would not get "significantly better" until early 2012.