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Jun 1, 2009
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Blacks Leisure swamped by charges

By
Reuters
Published
Jun 1, 2009

By James Davey

LONDON (Reuters) - Outdoor goods retailer Blacks Leisure Group (BSLA.L) plunged into a pretax loss as its surfwear business continued to struggle, and said its request for more debt from lender Lloyds Banking Group (LLOY.L) was "a big ask."


Blacks

The firm also said it needs a good camping season to boost its fortunes and was hopeful of benefiting as cash-strapped Britons cut out foreign holidays.

"The first half outlook will depend on the key second quarter and the success of our camping and summer clothing lines," Chairman David Bernstein said on Friday.

Shares in Blacks, which have lost three quarters of their value over the last year, were unchanged at 37.5 pence at 10:29 a.m., valuing the business at 16 million pounds.

Many UK retailers are struggling as consumers rein in spending amid rising unemployment and falling house prices.

Blacks reported a pretax loss before exceptional items of 6.8 million pounds for the year to February 28, versus a profit of 0.3 million the year before.

Analysts on average forecast a loss of about 8 million pounds, according to Reuters Estimates.

The outcome reflected a loss in the surfwear division, comprising Freespirit and O'Neill stores, of 7.8 million pounds, partly offset by a profit in the outdoor division, comprising Blacks and Millets stores, of 6.3 million pounds.

Revenue fell 9.1 percent to 267.6 million pounds, although the gross margin increased 0.6 percent to 54.3 percent.

The firm also booked exceptional charges of 7.6 million pounds for property and goodwill write-offs, onerous lease provisions and restructuring costs, which meant its reported pretax loss widened to 14.4 million pounds from 9.3 million pounds in the previous year.

As was the case at the interim stage the firm will not be paying a dividend.

Blacks said its like-for-like sales fell 0.5 percent in the 12 weeks to May 23, with outdoor up 1.2 percent and surfwear down 10.1 percent. Reduced gross margin over the period of 52.3 percent reflected price cutting to drive sales.

Last week Blacks secured a three-month standstill deal with lender Lloyds, which extended its 35 million pound banking facility to the end of August.

It remains in talks with Lloyds regarding a longer term facility that will enable it to develop its outdoor business and exit surfwear by converting the stores.

Chief Executive Neil Gillis declined to say how much additional debt he was after.

"It's a big ask that we've put in place, it's more than we've currently got and therefore it's not surprising the bank want a little bit of time," he told Reuters.

Blacks terminated bid talks with an unnamed suitor in March. Its largest shareholder is Mike Ashley's Sports Direct International (SPD.L), which owns 29.9 percent.

(Editing by David Cowell and Rupert Winchester)

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