JJB Sports dives and John Lewis struggles

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The Independent Online

Retail chain JJB Sports axed its dividend for shareholders today after slumping to a half-year loss.

The Wigan-based company reported a deficit before exceptional items of £9.7 million for the 26 weeks to July 27, compared with profits of £8.3 million a year earlier.

JJB remains "very cautious" about the trading outlook, but chief executive Chris Ronnie insisted that management would stay "calm and focused" over the rest of this financial year.



Retail revenues for the half-year were down 7 per cent to £309.1 million as a result of the closure of 96 stores and a 4.2 per cent drop in like-for-like sales. The same-store figure widened to 5.6 per cent for the 34 weeks to September 21.

Today's half-year loss also reflected losses at the Original Shoe Company and Qube, which JJB acquired at the start of the period.

Performance at the two businesses was lower than expected but JJB said it was pleased with the direction in which the businesses were going.

JJB's half-year loss contrasts with the 71 per cent jump in profits reported by rival JD Sports Fashion earlier this week.

The decision to axe the half-year dividend, following a 3p a share payout last year, caused shares in JJB to fall by a third today. Rival Sports Direct International was also 11 per cent lower.

Mr Ronnie said: "Whilst we remain extremely cautious about the current economic climate, we are absolutely convinced that our business model is right."

JJB's fortunes have been impacted by its exposure to the replica kit market and the failure of any of the home nations to qualify for Euro 2008.

The group, which has 400 retail stores, has looked to offset its reliance on replica kits by increasing the proportion of "own brand products" in its stores, adding to existing examples such as Olympus, Patrick and Lotto.

As part of a business review, it has increased the frequency of deliveries to its stores, introduced the store staff incentive scheme and opened a training academy in Wigan.



Meanwhile John Lewis Partnership today said department store sales fell sharply last week after several days of financial turmoil knocked confidence.

Sales at its Waitrose supermarkets also ground to a halt last week despite a late summer boost for barbecue food and ice cream.

The group said sales fell 5.6 per cent to £47.34 million across its 27 department stores and the firm's online operation johnlewis.com.

Retail operations director Patrick Lewis said comparisons with strong trading a year earlier, the distraction of warmer weather and uncertainty in the financial markets "all added up to a much tougher week".

Its home division continued to suffer amid the housing market slowdown, with sales diving by 14 per cent in the week to September 20.

John Lewis said the late summer, which contrasted with the cold seen last September, saw shoppers stay away from stores.

The sales slide followed a 7.5 per cent hike the previous week amid the back-to-school rush, which had boosted fashion trade by nearly 21 per cent.

But last week's hot weather and news of major banking woes - including the collapse of Lehman Brothers and rescue of UK bank HBOS - left sales "well below" last year, confirmed John Lewis.



Sales at Waitrose remained flat on a year ago, in spite of food inflation, which has bolstered sales figures across the industry in recent months.

Half-year results from John Lewis earlier this month showed that Waitrose was coming under pressure as hard-pressed consumers switched to cheaper alternatives.

But John Lewis said the better weather had driven a 10 per cent rise in bakery products and an 8 per cent increase in sales of sandwiches, while it upped its frozen fruits sales by 13 per cent.

Retail analyst Freddie George at Seymour Pierce said it was a "poor" week for the group.

"It appears that the turmoil in the financial markets is having a markedly increasing impact on consumer spending," he added.

Across John Lewis department stores, fashion sales fell 0.4 per cent, with electricals and home technology also posting a 2.4 per cent reduction.

The Partnership's Oxford Street store continued to produce double digit sales growth - ahead by 10.8 per cent, but there were some "eye catching falls" in its out-of-town outlets, according to Mr George.

Brent Cross suffered a 13 per cent plunge in sales, with Trafford down 17 per cent and Bluewater slipping by 15 per cent.

Retail survey figures yesterday from the CBI showed that sales across the sector had fallen for the sixth time in a row this month.

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