In focus: JJB

Retail Week Knowledge Bank’s updated profile tracks details, seeks reasons and highlights often contradictory options confronting management seeking turnaround solutions. JJB was much the largest UK specialist sports retailer, sales exceeding £900m in the early-2000s. However, double-digit margins had already peaked and started falling, despite the first losses not being recorded until 2008. By then, though, the damage was done. In 2006 JJB lost market leadership to Mike Ashley’s Sports Direct. The fact is a navel-gazing JJB had failed to counteract the fundamental dangers an acquisitive, vertically integrated, discounting ‘upstart’ presented until it was too late.

Suffice it to say JJB’s turnover continues falling, heading for about £300m in 2011/12 (versus Sports Direct’s £1.6bn), with store numbers down to 200, below half their peak, following two CVAs in two years. Moreover, sales densities languish at an unsustainable £125 per sq ft, while employment costs have only recently fallen from an excessive 21% of sales. Indeed, the challenge facing chairman Mike McTighe and yet another new team is huge. Besides the continuing soft underbelly of poor performance ratios and under-invested stores, Retail Week Knowledge Bank is concerned JJB seems less focused on pricing competitiveness than might be expected, given consumer perception that JJB is ‘expensive’.

Of course, price positioning has fundamental margin implications, just when margin rebuilding is critical. Moreover, management is faced with the wider conundrum of squaring individually logical recovery strategies on various fronts, but some apparently pulling in tangential directions, within a competitive market background.

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