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JJB’s survival hopes boosted despite negative trading figures

Sports retailer’s shares jumped 20% on hopes figures signal start of improved trading fortunes

The survival hopes of ailing sportswear chain JJB Sports have been given a boost – despite another batch of negative trading figures.

While analysts said JJB still has a mountain to climb, with losses of £60m expected for the year just completed, its shares jumped 20% on hopes the new figures signal the start of improved trading fortunes.

The group’s like-for-like sales were down by 7.6% in the six months to the end of January, but this was a big improvement on the near-18% decline over the previous half year.

Freddie George, a retail analyst at Seymour Pierce stockbrokers, is still advising investors to sell the shares and expects another two years of losses. But he said: “We are, however, becoming more confident on the outlook.”

Last year, JJB was forced to secure £97m in emergency funds from major shareholders. It also had to close 43 unprofitable stores and place a further 46 on review in a bid to stave off administration.

As well as slowing the decline in like-for-like revenues – albeit against weak comparisons – the company has been encouraged by the profitability of those sales, with margins up 32.1% in the five weeks to 29 January.

Chief executive Keith Jones said the retailer’s performance was broadly in line with expectations despite challenging conditions.

He added: “As we commented last month, weaker UK employment numbers and the ongoing credit squeeze on consumers create a tough environment. However, we are continuing to implement our turnaround aware of the importance of the key trading opportunities afforded by the European football championships and London Olympics.”

The group’s turnaround scheme involves cutting costs and increasing sales through investing in staff training, upgrading some of its 160 viable stores and improving its ranges.

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