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Is JJB sports back in trouble?

Despite the fact that JJB Sports had seemingly avoided bankruptcy earlier this year and looked set to continue to trade as normal, half-year figures announced today show a £42.9 million loss and concerns about the group's long-term future. It was only a few months ago that the implementation of a restructuring and refinancing plan appeared to have rescued the group from disaster, although the group has today admitted it may need further restructuring for the medium to longer term.

When you consider that turnover collapsed from £310.4 million to £178.6 million it is easy to see how difficult trading has been for the company. Despite the fact the company agreed a number of new banking covenants and banking arrangements earlier this year the management have admitted that even a small variation in their detailed forecast for the future could see the group break yet more banking covenants.

This is highly likely to alert potential bidders in the UK retail sector as the company still has a significant store portfolio and a relatively good name on the high street. If the company's finance is restricted any further this could impact upon trading and day-to-day operating which will ultimately place yet more pressure on the balance sheet and could reduce profitability. The fact that the management have highlighted potential problems in the short to medium term is a great concern to investors.

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