Corporate Profile: It's a sporting life, David

David Whelan is a former professional footballer turned company captain. His JJB Sports is the UK's biggest sport retailer, he owns Wigan Athletic and built a pounds 28m stadium for them and Wigan Warriors rugby league club. He has tackled a tricky merger, but what is that mark on the store floor?
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The Independent Online
DAVID WHELAN is running behind schedule. His afternoon helicopter tour of three of his sports stores finished an hour late, and his desk at the Wigan headquarters of JJB Sports, Britain's biggest sports retailer, has come out in an unsightly pink rash of adhesive notes, dotted around piles of papers, a few medicine bottles and a battered Oxo tin. But first things first. Squinting over his glasses at his phone, he slowly punches out the numbers. He calls his marketing director: Why are there still no interest-free credit signs for the golf displays? He interrogates a supplier: Why were there unsightly rubber marks on a new shop floor?

Some say Mr Whelan is an uncompromising northerner, blunt to the point of rudeness, and he is living up to that reputation. He looks up. "That floor," he growls. "It shouldn't have those marks. All these kind of things you've got to go and look at and crack the whip over." Tomorrow, he'll be doing this again, at six more Scottish stores, all part of running a UK-wide sportsgear retailing chain that accounts for one-third of the UK dedicated sports retail market. Popular product lines range from replica football shirts and football boots, to bicycles and golf clubs, and JJB can be found on most UK retail parks.

At 62 and white-haired, age and personal wealth should enable Mr Whelan, a former professional footballer, to take it easier, instead of tracking the minutiae of the company he founded 20 years ago. The chairman is also up to his eyes in the sporting interests he calls "hobbies". The Saturday before he had been watching Wigan Athletic, the football club he owns, beat Preston, an old Lancashire adversary. The match took the team to the top of the second division, a result that figured high on Mr Whelan's personal satisfaction scale. His game verdict? "Good," he says with characteristic bluffness. "Thought we were on the lucky side." Then there is the town's obsession, the Wigan Warriors rugby league club he rescued from bankruptcy two years ago. He built a pounds 28m stadium to house the football and rugby teams, half a mile from his office. The Warriors' first game there last Sunday was the Wigan's biggest event for years.

But this is not the moment for David Whelan to take his eye off the ball at JJB, where the need for good results is more pressing. Over a very difficult 12 months, JJB has struggled to assimilate Sports Division, the Scottish-based sportswear retailer it bought for pounds 229m last September. Then, Mr Whelan's goal (and he is an inveterate goalsetter) was to achieve market-leadership in the sportswear retail sector. Instead, he was criticised in the City for paying over the odds for Sports Division. JJB's shares, above 800p in March 1998, sank to 180p within weeks of the acquisition, a painful experience for Mr Whelan who owns 41 per cent of it.

The financial challenges of the merger were clear when results for the year to 31 January 1999 showed pre-tax profits had advanced less than pounds 2m to pounds 36m, including the acquisition, despite an 83 per cent increase in sales to pounds 373m. Mr Whelan blamed integration problems but it was as much to do with an overcrowded, overheating sportswear market, and 1998's cold, wet summer, which damaged sportswear sales everywhere. Mr Whelan had been hurting; marking down replica England shirts by pounds 10 went against the grain.

Over the past couple of weeks there are signs that some in the City believe JJB may have turned the corner. Mr Whelan's mood as he watched from the Preston directors' box was much the sweeter for two analysts' reports, from Dresdner Kleinwort Benson and Charterhouse Securities, which judged JJB's integration of Sports Division had largely been accomplished. JJB's share price has firmed from 327.5p at the beginning of August to 350p.

At his office in the corrugated metal barn which doubles as JJB's Wigan distribution base, Mr Whelan concedes he woke more than once during the Sports Division saga with the thought, "Why have I taken on such a bloody big chunk of aggravation?" At its lowest, JJB's share price valued the group at less than the price he had paid for Sports Division. "Had I been able to buy the company back I would have done it immediately," he says.

He has suffered worse. His promising career as a professional footballer with Blackburn Rovers was cut short when he broke a leg in the 1960 FA Cup Final. That was a terrible blow for a man for whom football was an escape from the coal mines, where he worked since leaving school at 15 with no qualifications. He was cast into the obscurity of Wigan's outdoor market, where he sold toiletries and groceries. There he began to learn his strength as an entrepreneur. As sales took off, he merged the two lines into a chain of 10 supermarket concessions (Whelan's Discount Stores) and sold them in 1978 for pounds 1.5m to the northern supermarket chain, William Morrison. Mr Whelan's promotional flair was soon evident. He sent his father to walk around Wigan in a full suit of armour, bearing a placard advertising his prices. The suit stands in a corner of his office today.

Although he had no need to work, Mr Whelan stayed retired for just 10 days. He said he could not bear the idea of days shopping with his wife. So he bought J J Bradburn, a Wigan sports retailer, for pounds 7,400. His first outlet, which sold fishing supplies, provides another Whelan legend. The biggest seller was maggots but a broken refrigerator - and a whiff of the possible consequences - forced him to rethink the product range. He never looked back. One store had become 119 when he floated the company in 1994 at a market capitalisation of pounds 64.5m.

Perhaps the sportsman in Mr Whelan makes him use specific goals to drive himself. The Sports Division deal put market-leadership comfortably under his belt, so Mr Whelan set himself a new turnover target. "For all of us here, pounds 1bn is our driving ambition," he says. "Everybody needs something to drive for, a new semi- detached or a holiday abroad."

The flak he took from the City over the Sports Division price still seems to trouble him. "It's all right people claiming you paid too much," he says tetchily. "We did pay maybe pounds 20m over the odds but the opportunity was there." Any later and JJB's own fast-growing market share would have exceeded the OFT's 25 per cent ceiling, he believes. But it was the unforeseen baggage of the deal that drew greater attention to the price. Sports Division had deliberately underbought stock, hoping a slump in Far East markets would release cheap surplus merchandise. That slump never came, and JJB was left fielding the shortfall. Not even a size 9 Puma boot was in sight.

Mr Whelan also found the 600 tills in the newly acquired stores were not Year 2000-compliant. Every store had to be shut for half a day to install new systems. Integration of the two company warehouses was tougher. They had to close for 10 days to transfer Sports Division's goods to Wigan. Advertising was pulled because Mr Whelan realised JJB could not supply the goods.

The effort to extract quick savings from the enlarged business has been furious, and bear the Whelan trademark. The closure of Sports Division's former Olympus town centre stores, due over two years, will be done in 14 months. "We've been absolutely ruthless, absolutely decimating the small stores," says Mr Whelan, with barely concealed relish.

Many observers are convinced JJB is on the upturn. The 449 outlets are focused on dominating the lower end of the market and with 290 out-of- town stores JJB is the leading sportswear outlet on retail parks. Dresdner Kleinwort Benson forecasts a decline of 6 per cent for 1999 full-year like-for-like turnover, an improvement on the 14 per cent slump at the 21-week stage. Benefits for gross margins are expected as the cost-savings of the takeover emerge.

Mr Whelan dates the sea-change in City opinion after he invited analysts to Wigan to see his brand of common sense at work in the warehouse. His "pickers" are paid for the number of garments they "pick" from shelves for distribution. Most weeks, goods worth pounds 16.5m are sent to the JJB shops and the system appeals deeply to the chairman's love of honest graft. "We wanted to say to the City, `We do work our balls off. We are honest and we are stickers'," he says. "From the day they saw us here, the view of JJB has seemed slightly different."

His sports teams have been a beloved distraction amid acquisition troubles. "I've been up to my eyes in Sports Division," he says with unusual affection. "The next minute the football club will be on to say, `Can we buy a player?' or, `The police won't give us a licence'." Business, he admits, has never matched the thrill of playing football. "Nothing can match it. The thrills. The lows. Everything that goes into an ordinary life is lived over 14 years for a professional footballer. Everything I've got I owe to sport."

So who else could David Whelan ask to open his Wigan headquarters in 1995 but Brazil's legendary Pele? With boyish delight, Mr Whelan put a photograph of himself with Pele in the JJB foyer. "To David Whelan, from your friend Pele," it reads. A replica Brazil shirt, also signed, is framed there too.

David Whelan sells dozens of unsigned Umbro-made Brazil shirts at his nearest superstore, half a mile away. Who says business and pleasure don't mix?

Fact File

Market capitalisation: pounds 432m

Turnover: pounds 373m for year to 31 January 1999

Pre-tax profit: pounds 36.1m

Main business: JJB Sports distributes and sells sports goods. Ranges include replica football shirts (14 per cent of sales), T-shirts, football boots and training shoes. It also sells bicycles, golf and fitness equipment. The company operates 449 stores in the UK and a few in Spain. It seeks dominance of the lower end of the sportswear market, and became market leader, with one-third of the dedicated UK sports retail market, after buying Scottish-based Sport Division last September

Key executives: Chairman, David Whelan; Managing Director, Duncan Sharpe (Mr Whelan's son-in-law); Marketing Director, Winston Higham

Employees: 8,000

Going For Goals: An Action Replay

1954: David Whelan leaves the mines to sign for Blackburn Rovers. He is paid pounds 5 a week

1960: After only 60 games, his career with the club ends when he breaks a leg in the FA Cup Final against Wolves. He will never play again. With a pounds 400 bonus for helping the team to reach the final, he sets up in Wigan market, selling toiletries

1978: The stall has become 10 supermarkets. He sells to William Morrison for pounds 1.5m, retires, then buys Wigan sports retailer JJ Bradburn for pounds 7,400 for one shop

1979: There are seven JJB stores. Sports sales boom

1983: Mr Whelan recruits his 23-year-old son-in-law Duncan Sharpe, a former golf pro, as an area manager. He is now JJB managing director

1992: Mr Whelan buys his local pie shop, and renames the "Poole's Pie" delicacy as the Wigan Pie, which he markets in the North-west

1994: JJB Sports, now a nationwide chain, is floated at 215p a share, putting the firm's value at pounds 64.5m. Mr Whelan and family sell 6.2 million shares to raise pounds 13m but the family retains a majority stake

1997: Mr Whelan saves Wigan Rugby League club from bankruptcy and amid intense local excitement, helps bankroll the pounds 500,000 contract which brings Australian star Wendell Sailor to the town. JJB sponsors the sport's national Super League for pounds 1.5m

1998: In September, Mr Whelan buys Sports Division for pounds 229m

1999: JJB completes rebranding of all Sports Division stores 10 months ahead of schedule and closes all Sports Division town centre stores. Mr Whelan sets pounds 1bn turnover target for the new group