JJB Sports declares a new price war
Sportswear retailer JJB Sports said yesterday it was not afraid to start a price war by adopting a “more aggressive pricing policy”.
Like smaller rival JD Sports the retailer has been a victim of the slowdown in consumer spending with like-for-like sales falling 8.8 per cent in the 26 weeks to 31 July. Operating profit was down more than a third at £17.6m.
JJB also attributed the sales slump to strong competition and lower sales of replica football kits in the absence of a major international tournament.
JJB finance director David Greenwood said the retailer had cut prices on clothing and footwear, sacrificing 120 basis points of margin, since the end of the half year. It has also introduced more exclusive lines and own-label merchandise at value price points.
Greenwood said further price cuts could be the cards “depending on what the competition does”.
The measures appear to be having some effect with the like-for-like trend showing signs of improvement, running 4.3 per cent down in the 10 weeks to 9 October.
JJB could benefit from the collapse of smaller rival Allsports, which went into administration last month, although clearance sales at the 92 shops being closed could have a short-term impact.
The retailer said it was not interested in acquiring any part of the business.
Sales are likely to be boosted by as much as £10m in 2006 by England’s qualification for the World Cup in Germany.
The retailer’s health clubs division provided the most upbeat news, announcing a 32 per cent jump in membership after adding seven new clubs during the half.
JJB also announced the appointment of former John David Group executive chairman Roger Best as a non-executive director.
