Survival talks at Blacks as losses escalate

Published on Thursday 29 October 2009 20:24

STRUGGLING outdoor chain Blacks Leisure yesterday said first-half losses had almost trebled, amid talks over a survival plan for the business.

The firm has announced plans to close 89 loss-making stores and called in administrators to its O'Neill boardwear outlets after warning it would breach banking covenants last month.

Blacks was last night locked in discussions over a restructuring plan presented to Lloyds Banking Group ahead of today's deadline set by the bank.

Blacks made pre-tax losses of 18.1 million in the 26 weeks to 26 August, rising from 6.7m previously, as its boardwear division and under-performing Blacks and Millets stores dragged the group down.

Chief executive Neil Gillis said: "In the current economic environment, it is clear 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."

Blacks refused to comment on a report that it may use a Company Voluntary Agreement (CVA), where landlords make financial concessions to support struggling tenants, to rid itself of loss-making stores. Shares in Blacks – which traces its roots back to 1861, when Thomas Black founded a sail-making company in Greenock – closed down 9.4 per cent, or 2.75p, at 26.5p.

Altium analyst David Stoddart said: "We clearly take the view that… both landlords and bankers would prefer to avoid the 'nuclear option' of administration. That being so, a profitable business should soon emerge."