JJB shares slump after investor writes off stakeContinue reading the main story
Shares in JJB Sports have plummeted 24% after its US shareholder wrote off its investment in the struggling retailer.
Dick's Sporting Goods, which took a 3% stake in JJB in exchange for a £20m investment in April, took an impairment charge worth roughly the same amount.
That means its entire investment in the British firm was in effect wiped off.
JJB's share price fell to £3.30 in London trade on the news, which was announced as part of the US group's second-quarter results.
"Since making our investment in JJB, JJB's performance has materially deteriorated from its expectations, partly due to a worsening macro environment in Europe, adverse weather conditions in the first quarter and lacklustre sales associated with the recent Euro championships," said Dick's Sporting Goods chief executive Edward Stack.Cost-cutting
"As we indicated at the outset, this is a high-risk investment that was structured to provide us with meaningful upside and capped downside," Mr Stack added.
"We have no further funding obligations to JJB at this time and will continue to monitor the situation."
JJB is in the middle of a cost-cutting programme designed to stem losses that totalled £100m last year, and has warned that sales in recent weeks have been poor.
Hurt by the economic downturn, it has also struggled to compete with rival Sports Direct.
In July Bob Corliss, a US turnaround specialist, joined JJB as its chairman to work on ways to improve its performance.
However, chief executive Keith Jones stepped down soon afterwards. Beverley Williams, the former boss of the La Senza lingerie chain, replaced Mr Jones on an interim basis.