Another British retailer admits defeat

British retail continues to suffer amidst one of the most difficult economic periods, and just this morning another “high street” name announced that it could no longer continue to finance a planned turnaround programme and put itself up for sale.

JJB Sports, the Wigan-based sports clothing retailer that was originally founded by Dave Whelan in 1971 when he retired from the ranks of professional football, and in which he sold his stake during the “good times” back in 2007 for GBP 190m, has announced to its shareholders that the company will conduct a formal sale process. Naturally this has not been good for JJB’s share price, with shares dropping from GBP 1.64 to GBP 0.73 since the announcement this morning.
 
The board of JJB have worked very hard to try to prevent this outcome. Earlier this year they managed to secure GBP 30m in external investment from the US retailer Dick’s Sporting Goods and additional funding from three other existing investors, Harris Associates, Invesco Asset Management and Crystal Amber Fund.  Unfortunately, it’s not been enough and when combined with falling sales and stiff competition, perhaps today’s announcement was really inevitable.

Still, as has been proven over the last couple of years, there does seem to be an appetite amongst buyers for ailing retailers, especially if the retailer can be picked up at a “bargain” price.

Filed under: M&A, retail, UK, dealmaking