UK outdoor specialty retailer Blacks Leisure said sales at its ongoing stores rose 12% for the six months ended Jan. 7, 2010 and put it in a position to issue $24 million to $32 million in stock in the first quarter.
The company's core Outdoor Division performed particularly strongly, with like-for-like sales increasing by 13.1%. The Boardwear Division recorded a like-for-like decrease of 4.4%.
Total Group sales in the period were £98.9m ($161.4mm), compared to £102.0m ($166.0) in the prior close 87 of its loss-making stores and put its surf retail subsidiary, Sandcity Limited (which operated the O'Neill retail business), into administration, or the British equivalent of bankruptcy.
The Group delivered a very strong performance over the Christmas peak trading period. In the six weeks ended Jan. 7, 2010 comp sales from the ongoing stores increased by 15.2% over last year.
Although the Group benefited from the particularly cold weather conditions in the later part of the period under review, like-for-like sales have been ahead of last year for each month since the restructuring plan began to be implemented in September 2009 during more clement weather.
The consistently strong trading results achieved by the core Outdoor Division, the continued success of the new Outdoor store formats developed over the last 18 months and the positive impact of the CVAs and associated restructuring measures, have placed the Group on a much stronger footing and significantly enhanced its recovery prospects.
Against this background, directors are considering a possible equity fundraising in the first quarter of 2010b to raise between £15m and £20m depending on investor demand.
The net proceeds would be used to refresh the existing store estate, roll out the successful new Outdoor formats and selectively expand the Outdoor Division's store portfolio, principally by re-entering markets vacated following the closure of stores which were over-rented and therefore loss-making even though they consistently achieved high levels of sales.
Company directors think new leases can be obtained which would create profitable stores in locations such as these where the Group has proven consumer demand. An equity fundraising would also allow for the cancellation of the higher interest seasonal peak bank facility of £7.5m in accordance with the Group's banking arrangements. A further announcement will be made in due course when a final decision on the equity fundraising has been made.
