The Wigan-based retailer published its interim results last month, but no cash flow problems were reported then.
JJB, to the Stock Exchange this morning (2 December), said: "[It] now believes that it is likely that it will breach certain financial covenants in the £25m revolving facility provided by Bank of Scotland, when they are next tested at the end of January 2011," prompting shares to plummet almost 20% to 4.6p in early trading.
Since November "trading conditions have remained extremely challenging and like-for-like sales have remained below expectations. The company believes that this will be further exacerbated by current adverse weather conditions."
Christmas and New Year trading remains "uncertain," JJB said.
However, the performance of six refitted trial stores could provide a way through its current difficulties, as trading there was "11% above the company average and money margin 21% above the company average, measured in the period from 1 November 2010 to 28 November 2010."
JJB is continuing to look at restructuring options and is considering alternative sources of finance.
In May, JJB appointed Walker to handle its £5m media planning account, and it anticipated increased ad spend.
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