Blacks Leisure shares drop on profit warning
25 November 2011 Last updated at 17:18
Outdoor goods retailer Blacks Leisure has become the latest High Street chain to warn of tough conditions.
The firm said that, based upon recent weak trading, it now expected the crucial Christmas period to deliver results below previous expectations.
Blacks, who reported a £16m loss last month, said it was “taking action to manage margins in order to drive sales”
Its shares fell 3 pence (67%) to 1.4p at the open of Friday trading, but later recovered to 3.25p.
The shares recovered to end at 3.88p, a fall of 11.43% on the day.
Black’s share price is down over 90% since January.
Its statement comes a day after Top Shop boss Sir Philip Green reported falling sales and profit margins.
Also on Thursday, JD Sports said its sales had fallen.
Blacks said that, “in line with other retailers” it had seen already challenging trading conditions worsen, with “downward pressure on consumer confidence and spending”.
The unusually warm weather in October and November has severely curtailed the traditionally profitable winter clothing sales period.
Blacks’ range is slanted towards outdoor gear.
Kate Calvert, retail analyst at Seymour Pierce, said the outlook for Blacks was uncertain: “We believe it will remain a challenge to come up with an acceptable solution for the company’s long-term future.”
The company, whose outlets include the Millets chain, said in its statement that it needed extra funding and was looking a range of options to raise it.
It said it had the support of its lender, Royal Bank of Scotland.
The group had already renegotiated its existing banking covenants in light of the earlier losses.
The firm has seen several directors resign in 2011, including chief executive Neil Gillis in February, its chairman David Bernstein in August and its finance director Marc Lombardo, who is due to leave in December.