JJB Sports: were investors put off by their bad business writing?
Yesterday, the retailer JJB Sports went into administration after it failed to secure a buyer. Whenever I hear of a company going bust, I always check out their most recent annual report to see how their business writing compares with their business strategy. It’s an exercise that never disappoints.
Our strategy The Company has made progress in implementing the Group’s revised business plan, however, in light of the increasingly poor macroeconomic conditions, management was forced to prioritise the preservation of cash in the short term and scale back its investment in store and proposition development, particularly in respect of those stores that management has identified as requiring a full transformational refit. In spite of this, achievements so far include:
> The closure of the first 41 CVA stores; > Operationalising our plans to drive continuous improvement across the Company’s basic retail disciplines, product sourcing, market planning, allocation and supply chain to forecast milestones; > Rolling out training to all in-store colleagues covering customer service, management techniques and improving product knowledge; > Establishing a multi-channel programme to drive improvements in on-line capability, aligned to the in-store channel experience. Our second half like-for-like growth in multi-channel sales was 77 per cent compared to a first half of 15 per cent; and > Reducing the Company’s cost base, by working systematically through identified areas of opportunity, including savings at the Company’s Retail Support Centre in Wigan. We have already begun to realise cost savings in respect of warehousing and distribution, store wages and central overhead costs.
Successful completion of the strategic investment and financing package will improve the Group’s working capital position and help to implement the Group’s capital expenditure plans, particularly in respect of its store transformation programme and multi-channel offering. Over the course of the next 18 months management intend to transform up to 60 stores into a format recently trialled with success at our Broughton store near Chester.
Chairman Mike McTighe’s verbose, turgid, noun-heavy prose reads like that of a terrified man.
For only someone trying to convince the world everything really will work out all right, honest, would feel the need to bang on about “operationalising our plans to drive continuous improvement” and “establishing a multi-channel programme to drive improvements in on-line capability aligned to the in-store channel experience”.
You feel so sorry for him you could almost forgive the comma splice in the first sentence.
You rather get the impression Mike McTighe was most comfortable on the shop floor helping you pick out a pair of trainers.
Somehow, he got promoted and everyone started banging on at him about multi-channel programmes and in-store channel experiences and he never had the nerve to ask what the heck they were going on about.
Instead, he went along with it all and adopted the meaningless abstractions of corporate life, hoping no one would notice.
It seems no one at JJB Sports did notice. But potential investors did, and buyer came there none.
A more confident Mike might have chosen to say the above more straightforwardly. Like this, perhaps:
We’re carrying out the group’s new business plan. However, the dire state of the economy has forced us to save money and reduce investment in new stores. We have:
> Closed the first 41 CVA stores;* > Hit our targets for improving things;** > Started training all our shop staff in customer service, management techniques and our products; > Improved our website, so that using it is more like shopping in-store. In the second half of the year, online sales grew 77 per cent, compared with 15 per cent in the first half; > Cut costs at our head office in Wigan. We’ve also saved money on warehousing, transport and wages.
If we find a buyer, we’ll be able to renovate our stores and improve our website. Over the next 18 months we plan to redecorate up to 60 stores in the style of our lovely new shop in Chester.
*The report doesn’t explain what a “CVA store” is. To understand the term, the reader needs to consult a document previously sent to shareholders. Perhaps it’s been left deliberately opaque because it refers to an insolvency agreement with creditors. A more confident Mike would have insisted on being more upfront with his investors.
** In the original, these “things” were “retail disciplines, product sourcing, market planning, allocation and supply chain”. I’ve got a vague idea what “market planning” and “supply chain” might involve, but “allocation” leaves me stumped. As for “retail disciplines”, I’ve no idea. It sounds like the name of a faculty in the sort of university that offers Masters degrees in floristry. A more confident Mike would have insisted on clarification, too.
On the same day that JJB Sports’ shares were suspended, the FT reports that Google’s shares hit an all time high.
So to test my theory that business writing and business performance may be linked, I took a look at the non-evil one’s most recent annual report.
Here’s a short extract from Google CEO and co-founder Larry Page’s letter to shareholders. Its style is typical of the whole document:
Creating a simpler, more intuitive experience across Google has been another important focus. I have always believed that technology should do the hard work—discovery, organization, communication—so users can do what makes them happiest: living and loving, not messing with annoying computers! That means making our products work together seamlessly. People shouldn’t have to navigate Google to get stuff done. It should just happen. As Sergey [Google’s other co-founder] said in the memorable way only he can, “We’ve let a thousand flowers bloom; now we want to put together a coherent bouquet.”
Larry's writing is friendly, readable and, most of all, confident.
No wonder investors would rather put their money in Google than JJB Sports.