JJB Sports Plc, the U.K.’s third- largest sporting goods retailer, fell the most in more than 14 months in London trading after the company added promotions following “more volatile” sales since August.
Revenue at stores open at least a year climbed 6 percent in the four weeks through Sept. 26, the Wigan, England-based retailer said today in a statement. That compares with an 18 percent gain in the prior month.
JJB will become “synonymous” with value-added promotions, with more planned for October, Chief Executive Officer Keith Jones said today in an interview. The 249-store retailer offered discounts such as the “Save and Spend” promotion in September offering 5-pound ($7.90) price-reduction vouchers on purchases of at least 30 pounds.
“With competition intensifying and competitors, such as Sports Direct, adapting similar strategies, it will be a long haul to put the company back on the recovery track,” said Freddie George, an analyst at Seymour Pierce with a “sell” recommendation on the stock.
JJB fell as much as 1.96 pence, or 18 percent, to 9.04 pence, the biggest intraday drop since July 6, 2009, and was down 11 percent as of 10:09 a.m. The stock has plunged 61 percent this year.
The operating loss in the six months ended Aug. 1 narrowed to 24.6 million pounds from 41.9 million pounds a year earlier after sales of replica football clothing increased during the World Cup soccer tournament, JJB said. Sales rose 10 percent to 184 million pounds. Gross profit, or revenue minus the cost of sales, rose to 77.6 million pounds from 60 million pounds.
JJB is sticking to a target of full-year gross margin at the “lower end” of 40 percent to 42 percent of revenue this year, even with an increase in sales promotions, Jones said.
A refurbished store format being tested in Slough, England, will be extended to five more outlets by the end of October, he said. The store has performed “well ahead of company group averages,” with sales exceeding the average at other outlets by 4 percent and average transaction values beating the others by 5 pounds, according to the CEO. Jones said he’ll decide next year on whether the remaining outlets will be renovated.
JJB has added to senior management this year with Kate Hayes, a former international retail director at Ben Sherman and a buying director at Nike Inc., appointed as trading director last month and Ron Rome as retail director in April. The company said today that Debbie Robinson, formerly head of food marketing at The Co-Operative Group, will run JJB’s marketing, completing the company’s sports-operating board.
“I never said the turnaround would be quick or easy but we have made a good start,” Jones said.
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