Dave Whelan's finally sold up at JJB Sports, but life on the high street isn't getting any easier. Neil Tague caught up with new chief executive Chris Ronnie to see how he's going to turn JJB's fortunes around.
The succession question at JJB Sports has been one that's intrigued Insider and stock market analysts alike in recent years. With founder Dave Whelan past retirement age and no obvious successor within the family, would this institution, Wigan to its very core, become just another faceless listed business? Surely not.
An answer of sorts came in June 2007, when the Whelan family disposed of its controlling 29 per cent stake in the business, netting around £3190m. Former Whelan lieutenant Chris Ronnie, backed by Icelandic financial services group Exista, stepped into the breach, first as deputy chief executive - with ex-boss Tom Knight now gone, he's in the big chair.
A career sports retailer, Ronnie worked for Sir Tom Hunter's Sports Division, transferring over when it was bought by JJB in 1998. As well as working under Whelan for JJB, he also spent time on the board of directors at Wigan Athletic FC, also owned by Whelan. Our interview takes place at Rigaletto's, the Italian restaurant at the JJB Stadium built by Whelan. Wigan Athletic play there, as do Wigan Warriors - until recently owned by Whelan. Rigaletto was the stage name of Whelan's dad, a club performer in the 1950s. Just in case you've not got the message - Wigan is Dave Whelan town.
So can Ronnie sidestep the considerable Whelan shadow and put his own stamp on JJB? As well as working for Hunter, he's been chief executive of Umbro and worked for Sports Direct's recluse-turned-exhibitionist Mike Ashley. Within ten minutes of meeting him it's tempting to conclude that for him the industry is like men's tennis - win the service game and the rest will take care of itself.
That's a bit glib, but Ronnie feels that customer service is one area where JJB has fallen behind. "The potential of this business is huge, it really is. But it's critical that we re-energise the retail division and re-energise the workforce," he says.
Christmas trading can make or break a retailer and Ronnie has moved quickly to make sure his troops are motivated for this important time. "We've introduced a fourth quarter incentive plan, right down to shop assistant level. It sounds crazy, but it's never been done here. We have a real problem - there's a group of talented people that are not being helped or looked after and that's the first thing we've changed," he says. "Leading on from that, there'll be a full-year bonus plan for 2008."
He's also started a JJB training academy, which employs 12 trainers, who work with staff on learning brands and products inside out. Given that one of JJB's key selling points is that they carry a wider range of sporting goods than their high street rivals and thus carry some specialised equipment, it seems ludicrous that this hasn't been done before.
"Our motto is "Serious about sport' and we have to live up to that. People have got to know how what they're selling works," says Ronnie. "They have to know if a bike's suitable or what the plus points of a certain golf club are. It's a big investment for us, but absolutely necessary."
Major investment is also being put into revamping the group's 420 stores. "A lot of the stores look tired and need re-energising," says Ronnie. "We've now opened our first new era store at the Trafford Centre, which has our new logo, a mezzanine floor and a lot of "theatre', as we say - music and screens. You need to give the consumer an exciting environment and an enjoyable retail experience."
Ronnie says that he makes a point of visiting JJB stores every week, something else that didn't happen before. "My background's in sourcing and at JJB the buyers never went to retail before - I believe we need to change that," he says.
He's too loyal to Whelan to say it, but you get the feeling Ronnie believes JJB has stopped moving forward some years ago. Other retailers have bitched about sky-high property rents doing them no favours, but Ronnie's looking closer to home.
"Property costs don't affect us if we're doing our job right. We're constantly reviewing our portfolio - our property director, Barry Dunn, has been with us 20 years and is excellent," he says. "Our problem is getting the right product in the stores and our product hasn't been right. We're getting it right now and that goes for online sales and JJB TV too. It's all about product."
Deals are being done. JJB is now the exclusive UK supplier for US sports label Champion, a deal that will run until 2012, with a further five-year option. And although the "shop within a shop" areas being developed for Nike and Adidas goods developed under Knight have been axed, JJB continues to work closely with them. And in June 2007 it bought a 48 per cent stake in rugby kit maker KooGa.
It should also be kept in mind that JJB wasn't exactly going backwards - in 2006 profits were up 28 per cent to £346m on revenues of £3686m. As well as its own shops, JJB has taken on the retail operations of the Everton, Rangers and Northern Ireland football teams under licensing agreements, something Ronnie is keen to expand.
While there are no current plans to open new JJB Soccerdomes - there are nine across the UK, mostly in the north - the fitness centres continue to be a huge success. Pitched at offering better value than rivals like David Lloyd, each gym also has a JJB store included. Fifty will be open by Christmas - the long-term plan is for 100.
Ronnie says: "The fitness centres management team has been great. It has carried the business in the last few years. We're constantly upgrading and improving our fitness centres." In its summer profit warning Sports Direct said it too is now looking to open fitness centres.
Both JJB and Sports Direct have bought major stakes in North West sportswear firm Umbro, which looks set to be rescued from its troubles by US giant Nike. Typically, Ashley has been lavish, doubling his stake in going up to 29.9 per cent. Ronnie has been more discreet, buying 10 per cent.
"It's a strategic investment," he says. "We wanted a seat at the table and we'd like to think that Nike won't ignore us." JJB and Sports Direct enjoy favourable buying terms from Umbro, but are reliant on replica kits for a hefty chunk of their income - around 13 per cent in JJB's case.
Ronnie spent four years with Umbro from 1999, moving the company from Wythenshawe to its Cheadle base and has his opinions on recent shortcomings. "There have been design mistakes made with important kits and the consumer's not stupid," he says. "But it's a great, well-supported brand that needed to push the value for money side - trying to compete with the global giants nearly sent the company under."
Regarding those all-important kit sales, Ronnie says that more realistic targets will be set, hopefully ending the cycle of "good weather plus summer tournament equals good results, bad weather plus no tournament equals profit warning'. "You plan better," says Ronnie succinctly. "We've made two business plans for 2008, one for if England qualify, one for if they don't."
One rival business that has planned well over the last couple of years has been Bury-based John David, which Peter Cowgill has moved upmarket, away from the football kit wars. Ronnie says: "Peter Cowgill's done very well, but it's a fashion business now. That's too high risk for me. What we do is provide sportswear and sports equipment for all the family - that's our selling point."
He's also courteous about his rivals and former mentors. "Mike Ashley and Tom Hunter are very different characters, but are both great retailers. I've been fortunate to learn from them," he says. Boardroom changes are already underway, with KPMG man Alan Benzie and former Next chairman David Jones joining up as non-executives.
Only time will tell if Ronnie can turn around the fortunes of JJB, but he's certainly not letting the grass grow under the feet of the business or himself. As we finish lunch he's dashing off to meet the Everton FC top brass and then on to the Trafford Centre to give the new store a quick once-over. If he can make Manchester's Market Street store an enjoyable retail experience then this writer will be converted.
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