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JJB get a helping hand from Dick's

America has come to the aid of their trans-Atlantic neighbours once again, as they fund the flailing sports shop's turnaround plans
 JJB Sports have been handed a lifeline
 
 

Pittsburgh based sports retailer, Dick’s Sporting Goods have finalised a deal in which they will pump an initial £20 million into JJB sports.

That figure is likely to double by mid 2013 in the form of convertible loan notes, also to the value of £20m. A further £10m investment from the JJB shareholders has also been put in motion.

Finally, a £15m deal with Adidas as part of a two-stage loan will complete the bailout for the company who stared administration in the face last year.

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Dick’s currently boasts 550 stores in the US and could potentially end up with a 60pc stake in the JJBs, making them the controlling shareholder.

"This is an exciting strategic investment that provides us with a valuable introduction into the workings of the United Kingdom sporting goods market from an established company that shares our commitment to serving the needs of core athletes," said Edward W. Stack, Chairman and Chief Executive of Dick's.

The takeover has come in true American, heroic fashion with JJB experiencing a continuation of last year’s dismal downfall in the first few months of 2012.

Like for like sales in 2011 fell by 13.1pc, while the overall gross margin dropped 24.9pc. So far this year, sales have decreased by a further 5.7pc.

This resulted in the closure of 41 stores in the past 12 months, as the early process of a complete company revamp got underway.

£96.5m was also scraped together in 2011 from their major shareholders as a last ditch stall.

It is now hoped that a more solid deal such as this will be the injection they badly need to push their way back to the top of the market.

Chief Executive, Keith Jones has stated that Dick’s input will "provide a real opportunity to accelerate JJB's turnaround, despite the ongoing credit squeeze on consumers and weaker UK employment numbers”.

While the news will undoubtedly have a positive effect on the immediate future of JJB, their revamp will still have to contend with Mike Ashley’s Sports Direct if they are to return to the top of the industry in the UK.

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