The brands that JJB sell are mainly world wide popular brands such as Nike, and Reebok, and many more this guarantees that there will always be a demand for their products in the sports clothing categories.
It seems that JJB Sports strategy is to concentrate on bigger stores,
JJB's stores are increasingly of a superstore concept, which average 13,000 square feet of selling space and in which full product ranges can be better displayed.
www.jjb.co.uk/corporateinfo
JJBs leisure division comprises 14 sites, which include three indoor soccer centres, 13 health clubs and superstores and one golf store and driving range.
Three new health clubs and superstores were opened in the first half.
A further four clubs/stores are planned for the second half and seven next year.
Investors should see these sites more as leisure centres than health clubs.
www.hargreaveslansdown.co.uk
The fact that JJB is expanding quite rapidly in the leisure market is also another way of marketing the company’s strength in the sports industry and marketing itself .
The V2003 festival has arena sponsored by JJB Sports PLC and the Strongbow cider brand.
This is a strong way of exposure for the company as festivals are on the rise in the UK and is a very good effort in marketing, showing the company as fun and young may pull in even more interest from more teenagers who attend events such as this regularly.
International Herald Tribune 06/06/2003
Weaknesses:
JJB Sports doesn’t have an online store which is a big disadvantage to people who choose to shop online rather than go the actual retail outlets, JJB although does have an online site www.jjb.co.uk
The company recently bought the discount retail store which brought down their share price by 15p, another takeover may have the same effect.
The company recently acquired TJ Hughes for £49m in cash, including a £2m dividend
JJB's exit from TJ Hughes, which it bought for 42.9 million pounds in cash, follows demands from investors who had urged Britain's biggest seller of soccer shirts to focus on its core sports business.
http://uk.biz.yahoo.com
On the 18th of November JJB sports sold the retail discount company TJ Hughes.
TJ Hughes sold for £49m
18 November 2003, Daily Mail.
The company gave into demands from shareholders to concentrate on its core sports business proving that shareholders have a large influence on the way that the company is run which may be a threat to further mergers.
Threats
There are a high number of sports retailers on the internet and this is quite a large threat to the company as they don’t have an online sales service
These online retailers have not only the advantage of selling online but an advantage of specialising in a particular sport, such as www.roces.com which specialises in inline skating and the sports clothes that represent inline skating. JJB Sports isn’t specialising as they are selling a wide range of sports brands, therefore losing out to competitors in the specialist mail order sportswear industry.
JJB offers a broader selection of fitness equipment than other clothing-focused multiples, but the 33 items listed in the company's online catalogue still represent only a small range in comparison to those offered by specialists and, indeed, even some department stores.
http://reports.mintel.com
In August 2003 JJB Sports was fined £8.373m by the OFT for fixing the price of Umbro football kits, along with 10 other companies
Ten businesses have been fined a total of £18.6 million by the OFT for fixing the price of Umbro replica football kit in breach of the Competition Act 1998.
http://www.oft.gov.uk
The OFT has fined the company for price fixing and there fore made a record of this, there may be further fines if the company is found in breach of the Competition act again and will have to be very careful not to make the same move, as of the fines imposed the highest was to JJb Sports.
A threat that wasn’t perhaps as significant in the past history of JJB Sports as it is
now, is the threat of a possible terrorist attack on London.
An example of shares falling though terrorist attacks are
“that fears of more al-Qaeda atrocities, the Footsie immediately surrendered a 29
-point rise to trade 56.9 points
lower”
www.thisismoney.com
Although when the Istanbul bombings happened it didn’t seem to affect the JJB Sports as these figures prove Last Trade 21 Nov · 261.00 p Change +4.50 (+1.75%) http://uk.finance.yahoo.com
So although this is a threat it hasn’t yet affected the company as we would expect.
The leading sources of imports of sports clothing are Hong Kong, China, Malaysia, Indonesia and Taiwan, with European sources led by Italy, France and Portugal. Turkey, Mauritius and Bangladesh are major sources for T-shirts
The fact that the company relies on most of its garments to be imported from outside countries leads us to the threat of if a political or environmental negativity was to happen in that country of import then this will create a chain of events leading to JJB Sports PLC perhaps losing a supplier or suppliers from one or more areas that they import from.
Imports were believed to account for over 90% of the sports clothing market in 2002, and they have shown a massive rise — to the detriment of domestic production — over the last 10 years
www.keynote.co.uk
Opportunities
The fact that sports clothes and footwear sales are becoming more popular can mean
that JJB will grow faster over the next 5 years,
Key Note forecasts that consumer
spending on sportswear will grow by a modest 17.6% over the next 5 years, reaching
£5bn by 2007.
http://www.mindbranch.com
The fact that clothing sales for sports wear is rising could mean that more people are doing sports, and since JJB Sports are expanding into the leisure division this customer base cough intertwine with that of the leisure industry.
In 2002, UK consumers spent £4.05bn on sportswear - £2.9bn on clothing and
£1.15bn on footwear - which represented 10.3% of the total clothing and footwear
market.
http://www.mindbranch.com
Number 10 Orders Flabby Britain To Get Fit
13 Oct 2003 The Observer, Sunday October 12, 2003
Tony Blair and the labour government are to set up an initiative to boost the fitness of people in the UK, this new campaign will start in the new year. This will boost the number of people wanting to do sports therefore putting up the number of people to visit sports club such as the ones owned by JJB Sports PLC and also will create more interest in the sporting clothes industry as people will need these clothes whether they are doing sports in leisure clubs or in their own homes.
It seems that whether or not sports clothes are the latest trend the sports clothing industry figures are forecast at growing, which means that JJB will be gaining even bigger market shares in the years to come.
The sports clothing market is forecast to reach £3.25bn by 2004 at current prices, while the footwear market is predicted to increase to £1.5bn.
Market Report June 2000 keynotes.co.uk
Sports clothing is firmly established in the retail sector, if no longer expanding its share, and its absolute market value will continue to increase.
www.keynotes.co.uk
Other social changes that have taken place over the past 25 years include the
'feminisation of leisure' resulting from an increase in women's disposable income, and
a consequent opening up of new markets for female special interest activities (e.g.
health and fitness)
JJB hopes to grow women’s wear from 20% to 40% of its offer by extending its own-branding in 2003, and will extend the number of women's brands it stocks.
JJB have realised that women are buying more sporty clothes due to fashion trends, and also the fact that more women are doing sports as they acquire more disposable income, they are catering to the needs of the market and this is a big opportunity for growth.
Imports were believed to account for over 90% of the sports clothing market in 2002, and they have shown a massive rise — to the detriment of domestic production — over the last 10 years
www.keynote.co.uk
Concluding the findings as to whether the merger should go ahead
The merger should go ahead, there are various good reasons for this, the first one being it is a horizontal merger they are in the same industry both have a set customer base and appeal to the same market of consumers.
It will be