JJB dives into red as retailers go reeling

JJB Sports has tumbled to a dramatic loss amid what it described as the worst retail recession it has ever seen.

The sports gear and health clubs group today said it made a loss of £8.4 million in the last six months against a profit of £8.7 million a year ago.

It scrapped the interim dividend, and offered a gloomy outlook for the future.

The shares crashed 32p to 72p as investors digested the news.

The numbers will raise deep concerns in the City about how JJB's nearest rival, Mike Ashley's Sports Direct empire, is faring. Sports Direct shares fell 5p to 581/2p.

Sales at JJB were down 5.6% in the 26 weeks to 27 July, partly because England football fans bought fewer shirts in light of the team's failure to qualify for this summer's Euro Championships.

Losses at two recent acquisitions — the Original Shoe Company and Qube — were the main reason for the slide.

Chairman Roger Lane-Smith said: “My board colleague David Jones, formerly chairman and chief executive of Next, has described the current climate as the worst retail recession I have ever known'.

David's statement is borne out by our trading results.

“Looking ahead, we remain very cautious about the outlook for retail given the background of a weakening consumer economy.”

Chief executive Chris Ronnie has faced talk he intends to lead a buyout of the company, taking it off the stock market. He had no comment on this today.

JJB shut 72 lossmaking stores earlier this year at a cost of 800 jobs.

Sales at the fitness clubs arm grew 7.5% to £35.6 million as it expanded from 43 clubs to 50. JJB claims further growth will come from this arm.

Dresdner Kleinwort said in a note to clients that it finds it hard to push the shares, adding: “The shares are not cheap, but we wait to see how Chris Ronnie's strategy has advanced before we change our neutral view.”

JJB said it cut the interim divi, 3p last year, to retain the “financial flexibility” it needs to support development plans.