Second profits warning issued by JJB Sports
Admitting it had overpaid for the company, JJB said the integration of the two chains' delivery systems had caused greater disruption than expected, leading to insufficient stock in the stores.
"We were only able to get one delivery per week to the stores instead of two," said David Whelan, the chairman, who admitted that the stores had regularly run out of popular items such as size 9 and 10 trainers.
The shortfall of stock led to sharply lower sales in both chains after Christmas. In the eight weeks to 28 March underlying sales were down by 5 per cent at the JJB outlets but 27 per down at the Sports Division stores.
The warning shocked the City which disputed the company's suggestion that it had made the market aware of the delivery issue.
JJB shares plunged 57.5p to 372.5p on the news. One analyst said: "It is not true to say the market was prepared for this. They seem to have had a major stock problem and didn't seem to get enough Nike and Adidas stock until the beginning of April."
Some analysts suggested that the warning increased market suspicions that the sports sector has gone off the boil. JJB has cut its margins and is cutting them again in an attempt to woo shoppers. For example it is charging pounds 39.99 for the new England replica football shirt launched last week, instead of the price of pounds 49.99 originally recommended.
Mr Whelan said sales had been improving slightly in the three weeks to 10 April. He said distribution services would be "back to normal" by the end of May. He also said the company was continuing to re-brand two Sports Divisions stores per week under the JJB name.
He denied that the market for training shoes or replica shirts had declined.
However, he said that in two weeks JJB will launch an Internet ordering service for gold equipment and replica football shirts.
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