Embattled retailer JJB Sports has announced plans to shut 45 stores and said another 50 were in danger of closure as it moves to shore up its finances.
The company, which currently employs 6,300 staff in more than 250 stores, said it was seeking a fresh rent deal with landlords under a company voluntary arrangement (CVA) which will enable it to go ahead with the store closures.
But JJB warned if it failed to reach an agreement the firm would face administration.
The CVA, which will be its second in as many years if approved, follows months of deteriorating trade and a recent bid to raise £31.5 million from its two largest shareholders.
JJB chairman Mike McTighe said: “The board and management team are working urgently on a fundamental restructuring plan which will significantly strengthen JJB’s finances and build on the group’s strengths. We are confident that, with the support of our key stakeholders, we can complete this restructuring in the coming weeks.”
JJB has struggled in the last couple of years, as dwindling trade has combined with separate investigations by the Serious Fraud Office, the Office of Fair Trading and the Financial Services Authority.
The company will shut 45 stores in the next 12 months and keep 50 on review for two years, but has identified 150 branches which are “core” to the group’s future. The properties which fall under the CVA plans for closure represent 40% of annual rent payments, JJB said.
The CVA will require approval from shareholders and involves reducing rent for stores set for closure and paying rent on these stores monthly rather than quarterly.
The company warned that it will “no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators and administrators” if it did not secure the CVA.
JJB has turned to Harris Associates and Crystal Amber, the company’s two largest shareholders, and the Bill & Melinda Gates Foundation Trust to raise £31.5 million. The proposal will be voted on by shareholders next Friday.