Doubts raised over future of Blacks after dire half-year results

Outdoor retail group's losses hit £16m, as new CEO unveils turnaround strategy

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

The group behind the Blacks and Millets chains saw its losses more than double to £16m and said it needs to refinance its banking facilities before 3 March. Blacks also said it requires additional funding to turn around its performance and is considering an emergency rights issue.

Its chairman Peter Williams, who has now been appointed permanently, 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 requirement 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."

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

Asked about reports that Blacks could face administration if its performance does not improve, Mr Williams said: "That is not part of the plan."

However, its half-year results laid bare the depth of the challenge it faces. Over the 26 weeks to 27 August, Blacks' losses widened to £16m from £7m the year before, dragged down by falling sales and margins.

Freddie George, an analyst at Seymour Pierce, said the losses are "worse than expected". The group's gross margins – the difference between the price a retailer pays for a product and that which it sells it 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, which controls Karrimor and Field and Trek, but in addition the specialists such as Go Outdoors and Mountain Warehouse."

Since the end of August, Blacks said its trading performance had deteriorated and its sales had slumped by 14.2 per cent. This compares to the group's underlying sales falling by 7.2 per cent to £81.1m over the 26 weeks.

But Ms Reynolds, the former head of the online lingerie retailer Figleaves, has identified a "huge opportunity" to revive Blacks' fortunes, after conducting a comprehensive review of the business in her first 100 days.

She aims to strengthen Blacks' retail disciplines such as better buying, merchandising and stock management, and online offers. Ms Reynolds, who made her name as a fashion executive at Tesco, also wants to further develop the group's own-label ranges, particularly in Millets. This will help to improve its margins.

She said: "Some of the retail disciplines were missing in the business." For example, Ms Reynolds plans for Blacks to be able to change its stock four times a year by 2013, as opposed to just twice before she joined in August. Shares in Blacks closed down 0.4p, or 4 per cent, to 8.9p.

Speculation persists that Sports Direct, which owns 21 per cent of Blacks, may again try to acquire the group at a knockdown price. Ms Reynolds has invited Sports Direct for a meeting, but it has yet not responded.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
News
people
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced