Sales decline at JJB Sports slows The sales decline at JJB Sports slowed in the first few weeks of this year and margins turned positive, but analysts cautioned that the improvement at the sports retailer had been flattered by the poor start to the previous year. The lossmaking retailer on Monday said like-for-like sales fell by 5.7 per cent year on year in the five weeks to January 29 - a slower decline than the 7.8 per cent fall reported in the previous 21-week period and well down on the 11.1 per cent fall in 2011. JJB's like-for-like cash gross margin increased 32.1 per cent, compared with a 3.2 per cent decline in the same period last year. The group's net debt fell from £18.8m to £11.3m year on year. Keith Jones, JJB's chief executive, said: "Our overall trading has improved in the second half of the financial year and we achieved a Christmas trading performance broadly in line with our expectations in the face of an extremely challenging consumer environment." However, analysts were not so positive in their assessment of JJB's update. Mark Photiades at Singer Capital Markets noted that the slowdown in the sales decline came against an even weaker start to last year because of harsh winter conditions. "With substantial losses forecast for the year ahead and given £11m net debt as at the January year-end, the group continues to operate with severe constraints on capital that it needs to transform and upgrade the business," Mr Photiades said. Freddie George at Seymour Pierce said JJB's update "encouragingly shows an improving trend, albeit against relatively easy comparatives," but added that he did not expect the retailer to break even until 2014. "We still need convincing . . . that the company has a clear strategy to turn around the business," he said. The company needs to find a niche and a format, which is differentiated from its competitors. Competition is intensifying, the cash position is a concern and the economic outlook does not look any better for the company's core customers. The news of JJB's shrinking sales follows a bumper trading update last week from rival Sports Direct, which said it could reinstate its dividend this summer following a strong performance over Christmas. The past few years have been tough on troubled fashion retailer JJB, which narrowly avoided administration in March 2011 and was at one time a takeover target of rival JD Sports . JJB's precarious financial situation was highlighted in October when the company reported a near-trebling of first half pre-tax losses to £66.5m. The group is midway through a restructuring programme that could take up to five years. "Consensus for the pre-exceptional, pre-tax loss for year-ending January 29 is about £55m-£60m . . . and it will be lucky to halve that in the current year, even with Euro 2012 and the Olympics," Nick Bubb, an independent retail analyst, said of Monday's update. JJB shares - 85 per cent of which are owned by just four shareholders, including Invesco Perpetual, Crystal Amber and the Bill and Melinda Gates Foundation - rose by 20 per cent, or 2p, to 12p in early London trading.