Cutting Room: JAG reflects market

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JAG boss John George says: “The past two months are the worst this company has ever seen.” That’s quite some statement coming from an industry veteran such as George, with 20 years in mobile retail under his belt.

Since Lloyds TSB withdrew JAG’s £2.3 million overdraft in January, forcing it into a ‘prepack’ administration, George has been investing heavily in the company himself to keep it alive.

The problem for him is everything has come at once, in quick time: the collapse of JAG’s purchase of 57 Go Mobile stores, the withdrawal of the company overdraft facility as a result, the grim economic climate, the difficult dealer market, the introduction of revenue share by the networks… and now the VAT man.

It can be argued that George, with such experience of the market, should have a wise head on his shoulders, and should therefore have taken preemptive action against such a strike. But these are extraordinary times, and JAG has suffered awfully bad luck amid the economic buffeting that has hit the high street in general.

The Go Mobile purchase started the troubles for George, with both Lloyds TSB and HMRC getting jittery about its performance. The only way forward for George is to cut costs – and it will take more than £200,000 per month for a return to the black.

Fonehouse is experiencing some of the same difficulties, with boss Clive Bayley running the rule over four of his dozen own stores.  It seems entirely likely the tough climate is worse on primary high streets, where JAG and Fonehouse operate. High rents, fickle customers and slow footfall.

It is informative to compare them with Welsh retailer Get Connected, which is seriously threatening JAG’s status as the UK number three (55 shops, and growing, compared with JAG’s 75).  Get Connected has kept costs low and has, by and large, stuck to secondary towns in the regions. It has had the same issue with revenue share, but business is brisk and customers remain loyal.

 

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