More dire results fuel fears for the future of Blacks

Julia Reynolds, the new chief executive of Blacks Leisure, yesterday revealed a turnaround plan for the troubled retailer of outdoor and camping equipment. But she appears to have a mountain to climb after the company posted dire half-year results and issued a "going concern" warning.

The business behind the Blacks and Millets chains saw its losses more than double to £16m and said it needed to refinance its banking facilities before3 March. Blacks also said it needed more funding to turn around its performance and was considering an emergency rights issue.

The chairman, Peter Williams, said: "We are looking at all options and that [cash call] would be one of them. We want to get it sorted out by February."

However, its need to restructure its finances led Blacks to warn that a "material uncertainty exists that may cast significant doubt about the group's ability to continue as a going concern, and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business".

Asked whether Blacks could face administration if its performance did not improve, Mr Williams said: "That is not part of the plan."

But half-year results laid bare the depth of the challenge it faces. In the 26 weeks to 27 August, Blacks' losses rose to £16m from £7m the year before, dragged down by falling sales and margins. Freddie George, an analyst at Seymour Pierce, said the losses were "worse than expected". Gross margins – the difference between the price a retailer pays for a product and what it is sold for – fell by 5.1 per cent to 43.7 per cent. Mr George said: "New management now faces a severe challenge. Blacks Leisure is being impacted by the move for specialisation in the sports category and is being squeezed not only by the value players, including Sports Direct, but in addition by the specialists such as Go Outdoors and Mountain Warehouse."

Blacks has been struggling for a number of years and narrowly avoided administration in 2009 by implementing an insolvency procedure that let it shed nearly 90 stores.

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