Outdoor pursuits specialist Blacks Leisure has acknowledged there is “material uncertainty” about its future but insisted progress is being made in turning the business around.
The retailer recorded a loss before tax of £14.4m in the year to February 28 – up from £9.3m the year before – on sales down to £267.6m from £294.4m.
Blacks is in talks with lenders to secure its finances and its £35m bank facility has been renewed until August 31. The retailer’s directors “have a reasonable expectation that the group will be able to meet its liabilities as they fall due for the foreseeable future”.
However, in his report finance director Marc Lombardo said: “The directors recognise that there is a material uncertainty of the bank facility not being extended beyond August 31 that may cast doubt on the group’s ability to continue as a going concern.”
Blacks chief executive Neil Gillis said he had made “a great deal of progress” since joining 18 months ago to lead a turnaround.
Gillis said costs and working capital have been reduced, exposure to the boardwear market cut, online operations developed and new store formats introduced.
He said: “We are a streamlined, enhanced and more focused business with the potential to deliver strong and sustainable growth.”
Blacks’ core outdoor business generated an operating profit before exceptionals of £6.3m but the group was held back by the poor performance of its boardwear arm, which made a loss before exceptionals of £7.8m.
In the first 12 weeks of the new financial year Blacks’ sales fell 4.6 per cent as a result of store disposals and like-for-likes slipped 0.5 per cent. The outdoor division generated a 1.2 per cent like-for-like rise but boardwear fell 10.1 per cent. Gross margin was down, reflecting “the strategic decision to increase promotional activity to drive sales growth”.