Invesco offers radical debt-buying plan to save JJB from total collapse

FUND management giant Invesco, the largest shareholder in JJB Sports, has been linked with a plan to force through a radical shake-up at the embattled retailer.

Invesco, which owns just under half of JJB’s shares, was said yesterday to have run out of patience and to have suggested to the board that it buys the company’s outstanding debt from Lloyds Banking Group.

It is understood American-owned Invesco, which has a big presence in the UK, believes this would put it in a better position to force through changes at the group. After a string of profits warnings and management change in recent years, JJB is seen as having fallen badly behind bigger rival, Sports Direct.

It is believed Invesco’s blueprint is that, after buying JJB’s debt, it would work with one of the retailer’s other main backers, Dick’s Sporting Goods of the US, on a major restructuring plan.

JJB, which is thought to have considered the proposal at a board meeting last week, has been involved in a long-running battle for survival after a slump in sales.

The company declined to comment on the Invesco speculation yesterday, apart from saying: “The company is looking at a number of options to strengthen its financial position and continue its turnaround.”

However, one source familiar with the talks between JJB’s leading shareholders – which also include the Bill and Melinda Gates, Foundation, with a 5 per cent stake, and Harris Associates with 30 per cent – told The Scotsman: “I don’t think this Invesco plan is a runner. It’s highly speculative and I would not give it much chance of happening at all.”

JJB secured its most recent lifeline just three months ago when it landed £20 million from Dick’s and a further £10m from existing shareholders, including the Gates Foundation.

It earmarked £20m of the most recent funding for converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much improved sales and margins.

But it admitted last month that it would need additional funds for the programme sooner than it had expected.

The former boss of lingerie chain La Senza, Beverley Williams, was last week appointed as interim chief executive at JJB after former chief executive Keith Jones stepped down abruptly recently.

Williams will work with American retail recovery specialist Bob Corliss, who takes over as chairman next month.

JJB made a £101m loss in 2011. By contrast, rival Sports Direct posted a 30 per cent rise in annual profits to £152m.

JJB, which has 180 stores and employs about 4,000 people, blamed its most recent lacklustre performance on factors including disappointing summer weather and poor demand for replica football kits during the Euro 2012 tournament.

City retail analysts say the group’s problems go back to the tenure of Chris Ronnie, chief executive between 2007 and 2009, who made a series of unsuccessful acquisitions.

One said: “There is a bit of a mountain to climb for the company even with the new formats. Whether Invesco becoming a more active investor and manager as an agent to accelerate change will help, who knows really?”

JJB’s shares closed on Friday at 5.75p, against a 52-week high of 22.5p, and having briefly hit 300p in 2004.