Blacks fights for survival as losses soar
OUTDOOR retailer Blacks Leisure yesterday revealed it had submitted a rescue restructuring plan to its bankers, after reporting its losses had more than doubled in the first six months of the year.
Blacks Leisure posted a pre-tax loss of £18.1m in six months to 29 August, compared to the £6.7m loss it reported a year earlier due to poor sales.
The firm, which runs the Blacks Outdoor and Millets chains, said it expects to announce the details of its plan shortly, following talks with Lloyds Banking Group.
Blacks warned last month it would breach its lending arrangements after worse than expected trading at its surfwear business and at loss-making stores. Lloyds agreed to freeze its lending agreements until 30 November, on condition it came up with an acceptable turnaround plan by 30 October.
Blacks plans to close 89 of its stores – including 50 loss-making boardwear stores that trade under the O’Neills brand – as part of a company voluntary agreement (CVA) with its landlords. As yet it is believed the group has been unable to decide on a compromise with its landlords.
It has until the end of November to get out of its stores ?– but any CVA relies on 75 per cent of its landlords voting in favour of the arrangement.
Neil Gillis, Blacks chief executive, said: “In the current economic environment it is clear that more radical restructuring measures are needed to free the core Outdoor business from the burden of the loss-making Boardwear business and a tail of stores that have not traded profitably for many years.”
CVA’s have been in the spotlight recently for creating an uneven playing field and penalising landlords for retailers’ mistakes.
This year landlords rejected proposals from Stylo, owner of Barratt and Priceless Shoes – fearing it would set a precedent. But ailing sportswear company JJB Sports succeeded in winning over creditors to close 100 of its stores in a CVA.