Restructuring of JJB cost £107m
Sports retailer says it has suffered significant exceptional costs associated with the restructuring and insolvency procedure
RESTRUCTURING AT RETAILER JJB Sports has cost the business more than £100m in the past 12 months, according to figures out this week.
Earlier this year, KPMG organised the retailer’s second insolvency procedure in as many years.
JJB Sports entered into a Company Voluntary Arrangement (CVA) in the first quarter of 2011. It has spent £107.9m on exceptional costs for the 12 months to 30 January 2011, which include restructuring and implementing the CVA.
A CVA is an agreement to repay a portion of debt over a period of time, while allowing the business to continue trading. The process must have the support of at least 75% of creditors, by value, to be pushed through.
A statement in the accounts said JJB has “significant exceptional costs associated with the CVA and restructuring”.
In a breakdown of the half-yearly accounts it shows the retailer spent £30.9m on exceptional costs in the 26 weeks to 31 July 2011 and £2.1m for the 26 weeks to 1 August 2010.
Exceptional costs include: goodwill impairment, restructuring and reorganisation costs, net loss of disposal of property, plant and equipment, impairment of fixed assets of CVA stores and release of deferred lease incentives.
The retailer has now posted a 177% rise in losses before taxation of £66.5m to 31 August 2011, compared with £24m for the year ended 10 August 2010.
As part of the CVA, JJB closed 41 stores, with another two scheduled to close before the end of the year. KPMG organised a reduced rental payment of 50% on certain properties until April 2012, as part of the CVA.
The retailer estimates it has so far made a saving of £8m in rent contributions and £5m in working capital from closing the stores.