Market watch: Struggling JJB Sports tipped to unveil hefty losses

STRUGGLING retailer JJB Sports will report another hefty loss on Wednesday after a year in which it found itself locked in a battle for survival.

JJB secured its immediate future last month after a tortuous process requiring a rent deal with landlords, as well as additional funds from long-suffering investors and the support of its main lender Bank of Scotland.

But the uncertainty caused by its battle to stave off administration will be shown in the full-year results, particularly due to previous stock availability issues as nervy suppliers reacted to JJB's plight.

In addition, resurgent rivals JD Sports Fashion and Sports Direct turned the screw in a market increasingly dominated by discounting.

Philip Dorgan, an analyst at Panmure Gordon, predicts JJB will make underlying losses of 64.8 million in the year to 31 January, down from 71.7m the previous year.

JJB, which has some 250 stores in the UK, hopes the problems are now behind it as it implements a turnaround that will see it close 43 unprofitable stores by April and place a further 46 under review in order to leave it with a core of 160 outlets.

It is also pinning its hopes on a new store format, which has been the subject of a trial in six shops and includes new fixtures and fittings and a better store lay-out.

Dorgan said he hoped the turnaround could prove successful, given time. He added: "Change at JJB will take time to come through in the numbers, but we believe that it now has the finances and strategy to restore the brand."

Next year's London Olympics could be a major driver of sales, he added.

But Peter Smedley, an analyst at Charles Stanley, was less optimistic about the group's long-term prospects.

He said: "Hopes of a viable JJB emerging from the prevailing severe competitive conditions are slim." JJB's turnaround is extremely uncertain given the fiercely competitive nature of the sector, with discounting and margin pressure rife, he added.

Banknote printer De La Rue is expected to report a significant drop in revenues and profits after disruption to a contract with one of its biggest customers. The world's biggest banknote printer is forecast to report on Tuesday that underlying profits fell 70 per cent to 31m in the year to the end of March, on sales down 20 per cent to 450m.

The supply problems, which are understood to be for its money printing contract with the Reserve Bank of India, caused its chief executive James Hussey to resign.

Tim Cobbold, who took over as chief executive on 1 January, is expected to provide a strategic review along with the results.

De La Rue suspended production on the contract in July, after it claimed some employees falsified paper specification test certificates at a plant in Overton, Hampshire.

The company, which also prints notes for the Bank of England and about 150 other countries, said in its half-year results in November that volumes were set to drop 20 per cent this year following the crisis, which had cost it about 35m at that time.

When it last updated the market, in January, the company said it was still in talks with the customer and the contract remained suspended, although it was rumoured to have been awarded to rivals.