Administrators sell 20 JJB stores to Mike Ashley's Sports Direct, saving 550 jobs in the UK
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There had been hopes that Mike Ashley would acquire 60 JJB shops, safeguarding more than 1,000 jobs. Photograph: David Moir/Reuters
JJB Sports, once Britain's biggest sports retailer, finally collapsed into administration last night after weeks of negotiations failed to secure the future of 133 shops and 2,200 staff.
The Wigan-based company, which was worth more than £1bn in its heyday, called in administrators from KPMG on Monday after attempts to sell the business foundered, despite initial interest from more than 100 parties including the company's founder Dave Whelan.
The administrators only managed to sell 20 JJB stores, the brand and the website to its arch-rival Sports Direct for £24m, saving 550 jobs in the UK, including warehouse staff. The shops are expected to be rebranded as Sports Direct.
Sports Direct, controlled by Newcastle United FC owner Mike Ashley, has also snapped up all of JJB's stock and the Slazenger Golf brand licences, as well as the company's headquarters in Wigan, a freehold property.
However, the remaining 133 JJB stores shut on Monday leaving 2,200 people out of work. Some 167 employees have been retained to help the administrators but will lose their jobs once their work is done.
The sale proceeds will be used to repay some of JJB's £45m debt to its lender, Lloyds Banking Group and other secured creditors, US group Dick's Sporting Goods and Adidas. But shareholders will go empty-handed, while suppliers – Nike, Adidas and Umbro – and landlords will get very little, if anything. The shares were worth less than a penny when they were suspended.
There had been hopes that Whelan, a former Blackburn Rovers footballer who is now chairman of Wigan Athletic, would step in to save the stricken company that he founded in 1971 when he turned a Wigan fishing tackle shop, JJ Bradburns, into a sports store. In 1994, the 120-store chain floated on the London Stock Exchange and four years later, the acquisition of Sports Division, its largest competitor at the time, turned it into the largest sports retailer in the UK.
Richard Fleming, UK head of restructuring at KPMG, said: "Successive attempts to restructure the business, both financially and operationally, have not been enough to prevent the company falling into administration. Unfortunately a buyer could only be found for 20 stores on a going-concern basis."
All staff made redundant have had their arrears of wages and holiday entitlements paid in full.
David McCorquodale, corporate finance partner at KPMG who led the sales process, said he and his team had spoken to more than 100 parties in the first few days of their appointment and eight trade and private equity players went on to table first round bids. "Unfortunately the level of cash and further operational restructuring required to rescue a more substantial part of the business was too much risk for most interested parties," he said. "We hope to be able to sell the leasehold interests of some of the remaining stores, which may result in re-employment of some staff."
JJB never recovered after a series of poor acquisitions saddled it with debt during chief executive Chris Ronnie's tenure between 2007 and 2009, although some believe its problems started much earlier. Analysts say JJB's management lacked the expertise to keep up with Sports Direct's aggressive expansion and strategy of acquiring brands such as Lonsdale and Dunlop, while JJB's clothing business was also hammered by competition from supermarkets and discount chains such as Primark.
Two company voluntary arrangements in 2009 and 2011 – legal agreements designed to reduce rent costs for struggling retailers – shrank the store portfolio but failed to save the business. JJB put itself up for sale in August this year after warning it could run out of money. It had been kept afloat thanks to the support of a core group of investors – Invesco, Harris Associates, Crystal Amber and the Bill and Melinda Gates Foundation – but by then shareholders' patience had worn thin and they refused to pump any more money into the beleaguered retailer.
The British Property Federation said that landlords had been hit especially hard by JJB's collapse. Liz Peace, the federation's chief executive, said: "Having played their part in twice saving JJB from administration, taking a financial hit in the process, landlords will be understandably frustrated and left wondering whether the pain was really worth it."
She added: "We can only hope that the timing of the administration isn't an attempt to avoid paying rent on the 20 units which have been sold." Rent owed to a landlord prior to the appointment of administrators is not treated as a cost of the administration. This has in the past led to tenants being put into administration just after quarter day – the last one was on Saturday – so they can use the premises for the remainder of the quarter without having to pay rent, she said.
Christopher Sheldon, who was made redundant in 2009, said: "Chris Ronnie ruined the reputation of the company in his short tenure of JJB. It never recovered from the mismanagement. It's a sad day but not a surprise."
With Britain mired in a double-dip recession, JJB has followed other well-known retailers into administration, including outdoor retailer Blacks Leisure and discount fashion chain Peacocks last year.
