Embattled specialist retailer Blacks Leisure has issued a profit warning but insists it still has the support of its bankers.
Blacks reported that trading conditions have worsened in “the last few weeks” and blamed “continuing downward pressure on consumer spending, particularly discretionary spending, and consumer confidence.”
The deterioration in trading has forced the retailer to take a margin hit as it clears stock and profit expectations have been reined back.
Blacks said: “As in previous years, the outcome for the full financial year is substantially dependent on the group’s trading performance over the important Christmas period but based upon recent trading, we now expect the outcome to be below expectations.”
The retailer reaffirmed that extra funding will be necessary to implement its turnaround strategy and said financing options, including strengthening its capital structure, are being considered.
“Constructive dialogue has been maintained with the group’s bankers, Bank of Scotland, who continue to be supportive,” said Blacks.
Seymour Pierce analyst Kate Calvert, who already expected Blacks to lose £20m this year, said: “With net debt forecast at £32 million for the full year pre-downgrade, we believe it will remain a challenge to come up with an acceptable solution for the company’s long-term future.”