Thousands lose jobs as JJB shuts its doors for good
Siobhan Kennedy
Washington Correspondent
The onetime sportswear giant JJB is to axe 2,200 jobs after weeks of frantic negotiations to save the business failed, writes our Business Correspondent Siobhan Kennedy.
Arch rival, Sports Direct, will take over 20 of the stores – far fewer than the 90 stores mooted just last week – the brand and the website, saving some 550 jobs.
However, the remaining 133 shops will be closed today and all remaining staff will be made redundant.
JJB, which put itself up for sale in August, threw in the towel earlier on Monday, calling in administrators from KPMG. The hope had been to sell the business as a going concern. But despite talks with numerous potential buyers, all were put off by the level of cash and restructuring required to turn the business round.
“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 as a result of store closures have had their arrears of wages and holiday entitlements paid in full,” said Richard Fleming, UK head of restructuring at KPMG.
It is a spectacular fall from grace for JJB, which was once the leading sportswear brand on the high street, with Sports Direct ironically nipping at its heels.
The company was founded by David Whelan, a former professional football player, in 1971, beginning with a single store in Wigan. He grew the company aggressively – some say too aggressively – adding hundreds of stores and even a line of sports clubs. By 2007, there were 430 JJB outlets across the UK and Republic of Ireland.
But in a decision Mr Whelan will no doubt live to regret, he decided to sell his stake in the business that same year, offloading his shares to Chris Ronnie, a former employee at Sports Direct.
Despite inheriting JJB with a growing profit, within two years, Mr Ronnie catastrophically reversed JJB’s fortunes and in 2009, the business posted a net loss of nearly £190m. That was put down to a series of disastrous, costly acquisitions and a weak strategy which saw Mr Ronnie take his eye off the ball and allow Sports Direct to move in and gobble up market share with its competitive pricing.
Mr Ronnie was later arrested and charged by the Serious Fraud Office on counts of fraud and money laundering. He is currently awaiting trial. In that sense, the story of JJB still has a good deal more to run.