The outdoor clothing firm Blacks Leisure today warned of a £2 million profits hit after uncovering accounting "discrepancies".
Blacks said it had uncovered the issues at Sandcity, its O'Neill boardwear subsidiary, while looking at a possible merger of the business with its Freespirit operation.
Sandcity's managing director, Darren Spurling, who is also a main board director of Blacks, has been suspended.
Blacks said Sandcity's performance in the two years to February 2008 had been overstated by around £2 million in total. Profits for both last year and the current will be £1 million below market hopes.
A company spokesman said: "There is no evidence so far of any fraud at all. The investigation is continuing."
The accounting issues are the latest blow for its boardwear brands, which struggled in Christmas trading. Sales at O'Neill and Freespirit dived by more than 10% over the festive period despite like-for-like sales up almost 3% across the group.
- More about:
- Clothing Manufacture
- Festive Events (including Carnivals)
- National Audit Office
- Serious Fraud Office