JJB Sports was given another lifeline yesterday after it unveiled a fresh funding of up to £70m over the next two years, with the lion's share being a "strategic investment" with a US sports equipment giant.
The transaction with Dick's Sporting Goods, which has nearly 500 stores in the US, could see it take control of JJB next year with a stake of up to 61 per cent.
But rival Sports Direct vowed to welcome Dick's with more "imminent" price reductions.
While the deal appears to secure JJB's medium-term future, the scale of the turnaround facing it was laid bare after it posted another calamitous loss of more than £100m over the year to 29 January.
Dick's is to provide JJB with a cash injection of £20m, largely in the form of convertible loans that can be converted into shares. But the US chain has the rights to acquire a further £20m of notes next year, which would give it a controlling interest in the 180-stores troubled chain.
JJB narrowly avoided administration in 2009 and last year and has burned through £196m of funding provided by its long-suffering shareholders since October 2009.
One of the world's biggest sports equipment retailers, Dick's posted profits of $263.9m (£149.1m) last year, on sales of $5.21bn.
The sportswear giant Adidas is also providing JJB with a two-stage loan of up to £15m over the next two years to help fund its store refurbishment programme.
The retailer's shareholders, Invesco, Harris Associates, Crystal Amber and the Gates Foundation of the Microsoft co-founder Bill, have also agreed to contribute £10m of funds this year and £5m next year.
JJB delivered a £101.1m loss for the year to the end of January, although this included exceptional items of £47.2m.
Dave Forsey, the chief executive of Sports Direct, said: "Dick's is well known in America for selling guns. We have three weapons of our own, and the customer knows they are unbeatable: price, price and price."