Blacks said the move had been forced by a change of strategy at LA Gear, which wants direct control over distribution of its products in Europe. It recently acquired its German distributor and also markets its products directly in France and Italy.
LA Gear will pay pounds 1.4m for the distribution business and certain assets. Blacks will receive a further pounds 700,000 for cancellation of the distribution rights, which were due for renewal in January 1994. The balance of the sum is subject to a valuation of Black's unsold stock.
The distribution business, which has faced difficult trading conditions, returned to taxable profits of about pounds 170,000 in the year to 27 February, after losing pounds 64,000 the previous year.
The company, due to report full- year results next week, is not planning to replace its LA Gear franchise with another brand.
The group owns the Quaser sports shoes brand which is being endorsed by Waqar Younis, the Pakistani pace bowler, and Nick Barmby, the Tottenham Hotspur striker. In addition, it owns UK rights to Fila, the Italian sportswear company, and O'Neill, the US surfing brand.
Simon Bentley, Blacks' chairman and chief executive, said the sale proceeds would be used to cut borrowings. City analysts estimate these amounted to about pounds 4m last year.
Analysts expect the company to report taxable profits of about pounds 100,000 for 1993 compared with a pounds 3.7m profit a year earlier. The results are likely to reflect the impact of a sharp downturn in consumer spending.
The shares closed 1p higher at 35p, down from a 12-month high of 85p.
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