Insurer withdrawal threatens JJB

See JJB's share price

Shares in JJB Sports have fallen 30% on news that a credit insurer has refused to cover its suppliers against the risk that the retailer cannot pay them.

JJB's shares fell 25% on Monday when the news emerged that insurance company Coface had withdrawn cover.

It comes a week after JJB reported a �9.7m six-month loss, with its auditors casting "significant doubt" on its ability to continue as a going concern.

Coface said it had withdrawn cover but would not comment further.

Without insurance, suppliers may insist on better terms or not supply goods at all.

Suppliers would usually allow a retailer a certain amount of time to pay for goods after they have been delivered and would use credit insurance to protect themselves during that time.

But credit insurers themselves have been having a hard time as they have had to pay for defaults linked to the credit crunch.

Euro blow

Last month, JJB said it was suffering from the worst retail recession it had ever known.

The problems were exacerbated over the summer as a result of all the home nations failing to qualify for the Euro 2008 football championships.

The retailer is based in Wigan and has 400 stores.

It was founded by Wigan football chairman David Whelan, who sold his 29% stake last year for �190m.

JJB's shares ended Tuesday down 8 pence, or 29.6%, at 19p.

E-mail this to a friend

Printable version