Blacks Leisure Group PLC submitted a restructuring plan to its bank after significantly increasing its losses in the first half due to continued losses at its Boardwear division. The U.K. outdoor retailer, which runs the Blacks and Millets chains, said it expects to announce the details of its plan shortly after discussions with Lloyds Banking Group.
In September, Blacks Leisure warned that it would breach a financial covenant test at the end of September. Lloyds agreed to a standstill on the covenant test to Nov. 30 as long as Blacks presented an acceptable turnaround plan by Oct. 30.
Blacks recorded a loss before tax and one-off items of £11.9 million ($19.5 million) in the 26 weeks ended Aug. 29. Restructuring and impairment costs amounted to £6.1 million ($9.9 million) in the latest period. First-half revenue fell 6.1% to £124.9 million ($205.7 mm).
The Outdoor Group sustained an operating loss, before exceptional items, of £6.2 million ($9.9 mm). The loss reflects some money-losing stores, a 0.6% dip in like-for-like sales, and lower margins due to aggressive promotional activity and the strengthening of the U.S. dollar. The company said its Outdoor Group “continues to trade successfully but significant further restructuring measures” will be necessary to restore the Group to profitability.
The Boardwear division, comprising Freespirit and O'Neill, reported an operating loss before exceptional items of £3.1 million ($5.1 mm) due to a 4.3% comp decline and significantly increased promotional activity. Eight Boardwear stores were re-branded to an outdoor format, which has led to an improve performance.
Neil Gillis, CEO, 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.”
