David Prosser: JJB steps back from the brink – for now
Wednesday 23 March 2011
Outlook So JJB lives to fight another day. That it is not shutting up shop in the face of the problems that have plagued it in recent times is a tribute to the tenacity of its management. KPMG, its accountant, also deserves congratulations for the imagination it showed in coming up with a company voluntary arrangement (CVA) that, while unpalatable for landlords, at least offered them some upside when (or if) JJB returns to health. That was an advance on the detail of other CVAs that the retail sector has come up with in the past.
Still, a much bigger battle is yet to come for this retailer. JJB is now staking its future on a business model that is being trialled in six stores where the old format has been overhauled. It says the early results from the trials are promising, but it will be quite some trick to prove that JJB can compete with Sports Direct, the stellar performer of the sector, while still coping with a cost base that was built up around a much larger network of stores.
JJB is blessed in having a supportive set of shareholders, which are committed to its next fund-raising. For the sake of those investors, as well as employees and landlords alike, let us hope that despite the deteriorating high-street environment, they do not find they have simply thrown good money after bad.
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