JJB losses soar as company claims it has turned corner

JJB Sports has admitted that its stores will not be fully stocked in the run-up to Christmas as losses at the struggling chain soared.

But the executive chairman, Sir David Jones – who is considering a rights issue to recapitalise the group – insisted that the group was turning the corner and had the support of suppliers.

First-half pre-tax losses surged to £42.5m from £13.9m last time on revenues down by a fifth to £167.3m.

Sir David said that having secured a company voluntary agreement with creditors the company was gradually restocking its shops and would be able to turn itself into a viable business.

"We are in a much stronger position. We are getting fresh stock but it will take time. It will be a gradual process."

That means, however, that the company will not be fully stocked up in the run-up to Christmas. Its stores will not be where Sir David wants them until at least the first quarter of next year, although a new chief executive should at least be in post by then.

Sir David said: "By quarter four our stock levels will improve, but it won't be until the first quarter of next year that we will be at the level we want to be at. I'm extremely happy though that brands are well and truly behind us."

Sir David also dismissed the competitive threat posed by bitter rival Sports Direct: "They are a discounter. If you're really serious about buying sports equipment you would not go there."

JJB reported Sports Direct to the Office of Fair Trading s earlier this year, claiming criminal price-rigging and fraud. The OFT has begun an inquiry into possible anti-competitive behaviour between the two companies but JJB has immunity for blowing the whistle. That might not cover a parallel inquiry by the Serious Fraud Office (SFO), but the company does not expect to face fines.

There has also been an ongoing row between Sir David and the Sports Direct boss Mike Ashley over a £1.5m loan to Sir David from Mr Ashley in 2007.

Asked if he regretted taking the job at JJB, Sir David said: "Absolutely not. I had no choice. The company would not have survived otherwise. We see a market opportunity here, to fill the gap that was filled by the independent sports shops. The JDs and Sports Directs are not doing that."

The shares fell 1p to 38.25p, although that is still well ahead of the 3p they were trading at at the beginning of the year.