JJB Sports gives profit warning

Sporting goods retailer and health club operator JJB Sports will issue its seventh profit warning in 18 months on Friday. The company has suffered under a price war in the sporting goods market and said that resulting pressure on margins would send pre-tax profits to £32 million to £36 million, almost 50 percent down from £63 million in the previous year. The warning sent shock waves through the City. “I haven’t seen that many businesses fall apart as quickly as this,” analyst Sanjay Vidyarthi of Teather & Greenwood told the FT. “It was making nearly £100 million four years ago. In April, I was looking for £61 million this year, but today I’ve cut it back further to £33.5 million.”

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JJB blames the competition and admits to having a slow reaction to their lower prices. “We only recently came to the conclusion and in October we brought prices down,” said finance director David Greenwood. “We are now accepting that competition on the high street generally is so strong that these are the sort of prices we are going to have to have.” Greenwood did say that underlying sales were improving and pointed out that this year’s World Cup would help, but admitted that tough market conditions would probably persist for at least six to nine months.