Blaming poor performances from its Freespirit and O'Neill surfwear chains, Blacks Leisure, the U.K. outdoor retailer, issued a post-Christmas profit warning and announced a major cost-cutting drive. Like-for-like sales at Freespirit and O'Neill tumbled by 10.8% for the six weeks to January 12. Although like-for-like sales at the retailer's Blacks and Millets chains rose by 5.4% and 7.8%, respectively, for the period, the poor performance of its surf brands led Blacks Leisure to warn that full-year profits will be below market estimates.

The company announced plans to slash its cost base by £3 million ($5.9 mm). This plan will result in the loss of around 60 jobs at its Northampton head office, which currently employs 270 people. The retailer also said it would test new store formats and reduce the number of products that it sells in its stores.

Neil Gillis, Black's CEO, said that sales growth will be “hard to deliver” in 2008, although he foresees profit growth over the period. “A lot of retailers are reporting bad news, but at least we have bad news with a plan. We are going into a tough market with a plan and some upside potential,” he said.