Fears over the future of JJB Sports intensified today after the retailer said it had failed to secure the funds needed to overhaul its stores.
The company announced it has put itself up for sale but warned that shareholders, who include the Bill and Melinda Gates Foundation, may see their stakes wiped out in any rescue deal.
Wigan-based JJB, which has 180 stores and employs 4,000 people, has been involved in a long-running survival battle after a slump in sales and a string of profit warnings.
The company secured its most recent lifeline just four months ago when it landed £20 million from US retailer Dick's Sporting Goods and a further £10 million from existing shareholders.
It earmarked £20 million of the most recent funding on converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much-improved sales and margins.
But it admitted last month that continued poor trading meant it would need additional funds for the programme sooner than it had expected.
JJB has held discussions about securing further funds and restructuring its store portfolio but said today it now believed it will not be able to raise the level of support required to implement the turnaround.
It added: "As a result, the board has decided to conduct a formal sale process of the company and now wishes to invite offers to support further investment in the company, which may result in a sale of the company or its assets."
JJB has debts and outstanding loans totalling £36 million and given the level of current borrowings it said there "can be no assurance that any proposal or offer that may be made would attribute value to the ordinary shares of the company."
Matthew McEachran, a retail analyst at Singer Capital Markets, said JJB's big rivals Sports Direct and JD Sports Fashion were now poised to pick up a chunk of the store estate.
He said: "On the assumption that a sale is unlikely, the next step is likely to be administration which will inevitably see capacity withdrawn via closures, albeit not necessarily of the entire business."
JJB Sports was valued at less than £2 million today after shares fell 80% in the wake of its warning that shareholders may be wiped out in any rescue deal.
The company, which has asked KPMG to handle the sale process, will not be subject to the usual takeover rules governing the disclosure of interested parties while negotiations are taking place.
David McCorquodale, corporate finance partner at KPMG, said: "While it is very early days, I anticipate significant interest in the opportunity to acquire this leading multi-channel authentic sports retailer.
"There is a real place on the British high street for a retailer of performance gear for the sports enthusiast."