Interview: JJB boss confronts agony of store closures

By Neil Craven for The Mail on Sunday
Updated: 14:42 EDT, 5 March 2011

Mike McTighe has suffered a painful few weeks and complains that his agony is not likely to end for another two months.

Rescue mission: Chairman Mike McTighe was parachuted into JJB Sports in December

As chairman of beleaguered retailer JJB Sports it is tempting to point out to him that shareholders and staff have been suffering for a lot longer.

But credit is due to the man who parachuted into the perennially ailing firm in December to lead the latest rescue attempt.

And, suffering from acute pain from a muscle spasm in his back, he struggles to stand since he missed out on his daily painkillers in an effort to keep a clear head on this crucial day.

By 2pm last Thursday he has spent most of the day trying to move as little as possible while also convincing JJB's shareholders and suppliers that the future for the firm will be different this time.

For more than two years staff have been permanently braced for the next disaster. The latest plan, the second major restructuring in as many years, will see the closure of 43 stores, about a fifth of the chain, by April next year. A similar number will close the following year if their performance fails to improve.

The chain has already agreed an injection of £31.5m from shareholders, with another round of fundraising expected later this month for what industry sources say could be as much as £100m.

If it all seems to be happening quickly, the reason is simple. 'The announcement we made regarding the fundraising on December 23 basically saved the company,' says McTighe. 'If it wasn't for that announcement, the company would have gone into administration. There's no doubt.

'We don't have the time for a solvent restructuring so we sat down store by store and put the stores into three groups. Some we decided have no chance and need to close.'

Landlords are broadly supportive, even if through gritted teeth. Through a Company Voluntary Arrangement (CVA) between the company and its creditors they will be given a chance to recoup some money over the long term that would be lost if the chain were forced into administration. With ever more empty units on the High Street, they may feel they have little choice.

The proof will come in a vote on March 22. McTighe says he is positive. 'No one wants to move forward unless they can see that others are willing to do so,' he says.

'I always look to form a coalition of the willing. If I can do that then there is a way forward. We believe the CVA will be supported if that coalition stays together,' he says.

McTighe, 57, has three children and, although still an avid skier under normal circumstances, he blames his current physical pain on too much running and rugby as a youth.

He worked at GE in his 20s and later at Cable & Wireless. Lately he has developed a reputation as a company doctor and has worked on projects for Lloyds Banking Group, JJB's main lender, for several years.

He is also chairman of electronics firms Volex and Pace and, among other positions, is senior non-executive director at online gambling firm Betfair.

'Lloyds Bank felt that the JJB board needed some support in terms of restructuring experience,' he says. The vision for a well-run retailer presented to the bank by McTighe and his chief executive Keith Jones, and currently being reviewed by accountants Grant Thornton and Deloitte, is vastly different from most customers' experience of the shops at the moment.

'I've looked at the people, systems, processes in this business and I've come to the conclusion that the weakness is the people,' he says bluntly.

He pauses as he begins to talk about the heavy staff turnover at the chain, and then starts again. 'It's not that they are necessarily bad people, but they haven't been incentivised or adequately trained, and how can you train someone who you have taken on to do eight hours' work a week? We need a different mix.

'We need to re-educate people in the stores. The good news is that is within our control but it will take time to deliver.

'There is a position for a mid-market national retailer for sports equipment and products. It will not be at the discount end. We are not going to compete with Mr Ashley at Sports Direct.' Mike Ashley, the controversial owner of Newcastle United football club who is widely viewed as having outcompeted JJB, particularly on price, may not see it that way.

But McTighe says the advantage will eventually be in the products that JJB offers to casual and professional customers and in the improved service.

'I keep telling people this is three to five years. I have to keep calibrating them because this is only the beginning,' he says.

'I have to set realistic expectations. If people are up for the long haul, we can make this happen. This cannot be fixed in six months.' His aim is to continue to repeat that mantra to all the stakeholders.

'What tends to happen to companies in this situation is they focus internally, they get surrounded by advisers and they begin to communicate less,' he says. 'My whole strategy has always been to reach out and engage.

'I wish there was a magic bullet, but this will be done quarter by quarter.

'Either the sceptics and cynics will be proven correct, or JJB will be turned around. Obviously my ambition is the latter.'