New Blacks Leisure chief executive Neil Gillis set out his turnaround plans for the business as the retailer reported that its full-year profits are likely to be below market estimates.

Gillis, who joined in November from health club Esporta, wants to cut the cost base by£3 million in the next financial year. He also plans to test new formats to better differentiate the retailer’s Blacks and Millets chains, as well as rationalise the product range.

Gillis said: “The trading performance to date reflects the business over the past couple of years. It’s a business that needs sorting out, but there is so much opportunity.”

Blacks’ cost base will be reduced by head office redundancies at the end of March. Gillis said: “Over the past three years, the headcount has increased 80 per cent at head office, so this needs to come down to a sensible level.”

Four new-look stores – two Blacks and two Millets – will open in March with changed logos and formats. The Blacks shops will be pitched at the high quality outdoors market, targeting customers that “want to buy a good-quality jacket, rather than climb a mountain,” said Gillis.

Millets will focus on the “heavy duty, expert end of the market”. Gillis is consulting suppliers about rationalising the range and bringing in new brands.

Landsbanki analyst Mark Photiades said the turnaround plans made sense, but there would be no quick fix. “With a dominant 20 per cent share of the outdoors market, the group should be able to generate decent returns, but, in our view, radical action is required to drive sales and profit densities,” he said.

Gillis said shareholders, including Sports Direct boss Mike Ashley, have been briefed and are supportive of his revival plan. Gillis fronted a bid for Blacks last March with the backing of a consortium led by Archie Norman’s Aurigo Management vehicle, but was rebuffed because shareholders saw the potential in the business.

For the six weeks to January 12, Blacks reported like-for-like sales up 2.8 per cent and a total sales increase of 2 per cent.