Life just got even harder for JJB Sports. Dick's Sporting Goods, the US sporting goods and ammunition chain, has written off the £20m it invested in the Wigan-based retailer just five months after throwing it the lifeline.
The shares dropped 26% to just 3.2p.
Dick's chief executive Edward Stack said:
Since making our investment in JJB, and as publicly announced, JJB's performance has materially deteriorated from its expectations, partly due to a worsening macro environment in Europe, adverse weather conditions in the first quarter and lacklustre sales associated with the recent Euro [football] Championships.
While we continue to believe in the underlying opportunity within the UK sporting goods market, in light of these developments and our own assessments, we have determined to fully impair the value of our investment. As we indicated at the outset, this is a high risk investment that was structured to provide us with meaningful upside and capped downside.
Atif Latif of Guardian Stockbrokers [no connection to the newspaper] told Reuters:
"Over the medium term there is value in the company and with a strategy change we could see improvements that could increase the share price from current levels. We await developments of any other names that may look to buy some of the debt on JJB that could look to turn around the fortunes of the company."
