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JJB shares slump after investor writes off stake | |
(21 days later) | |
Shares in JJB Sports have plummeted 24% after its US shareholder wrote off its investment in the struggling retailer. | |
Dick's Sporting Goods, which took a 3% stake in JJB in exchange for a £20m investment in April, took an impairment charge worth roughly the same amount. | |
That means its entire investment in the British firm was in effect wiped off. | |
JJB's share price fell to £3.30 in London trade on the news, which was announced as part of the US group's second-quarter results. | |
"Since making our investment in JJB, 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 championships," said Dick's Sporting Goods chief executive Edward Stack. | |
Cost-cutting | |
"As we indicated at the outset, this is a high-risk investment that was structured to provide us with meaningful upside and capped downside," Mr Stack added. | |
"We have no further funding obligations to JJB at this time and will continue to monitor the situation." | |
JJB is in the middle of a cost-cutting programme designed to stem losses that totalled £100m last year, and has warned that sales in recent weeks have been poor. | JJB is in the middle of a cost-cutting programme designed to stem losses that totalled £100m last year, and has warned that sales in recent weeks have been poor. |
Hurt by the economic downturn, it has also struggled to compete with rival Sports Direct. | Hurt by the economic downturn, it has also struggled to compete with rival Sports Direct. |
In July Bob Corliss, a US turnaround specialist, joined JJB as its chairman to work on ways to improve its performance. | |
However, chief executive Keith Jones stepped down soon afterwards. Beverley Williams, the former boss of the La Senza lingerie chain, replaced Mr Jones on an interim basis. |