Blacks Leisure, the U.K.s largest outdoor specialty retailer, has been forced to renegotiate with lenders after a 10 percent slide in sales for the year-to-date period triggered loan covenants, possibly forcing the retailer to call on shareholders for more capital, according to the companys Interim Management Statement filed on Friday.

Blacks Leisure CEO Neil Gillis said the retailer has enough cash to continue operating until at least February, according to the report.
Total sales at Blacks Leisure reached £54.6 million in the 19 weeks ending July 9, down 10.9 percent from £61.3 million in the comparable period last year. Comp store sales, excluding VAT, declined 9.7 percent  but have been running 3.2 percent ahead of last year since the end of May.

As part of the retailers previously announced effort to convert Boardwear stores to its Outdoor format, three Freespirit stores have been converted to the Blacks fascia and one store lease surrendered during the YTD period.  Five stores are in the process of withdrawing from Boardwear and will then be rebranded to other Group fascias or the leases surrendered back to the landlords.

In the statement, Blacks Leisure outlined its financing options:
Since the year end the Group’s indebtedness has increased significantly due to both normal seasonal factors and the challenging market conditions affecting the U.K. retail sector as a whole.  Therefore, the Group has been working alongside its bankers, Bank of Scotland plc, to extend and increase its banking facilities. 

The Group has agreed, subject only to completing documentation, an extension to the availability of its existing seasonal peak facility together with an additional short term facility such that the Group will have total bank facilities of up to £40 million until 15 December 2011 at which point the facilities will revert to the previously agreed core facility of £35 million supplemented, during certain periods, by the seasonal peak facility of £3 million. The extension of banking facilities is accompanied by an amendment to the covenants which, from February 2012, will revert to those previously set.  In view of the maturity of its existing facilities in November 2012, the Board will seek to refinance its existing banking facilities in such time to ensure that the Group has appropriate arrangements in place for its future requirements.

In related news, the companys Board has appointed Julia Reynolds as CEO and a Director, effective August 1.