UK outdoor equipment retailer Blacks Leisure has today set out a turnaround strategy for the business following the confirmation of a £16 million loss before tax for the first half of its financial year.
Losses for the 26 weeks ending August 27th 2011 were more than double the £7.2 million reported for the same period last year, whilst like-for-like (LFL) sales declined 7.2 per cent year-on-year to £81.1 million during this time.
CEO Julia Reynolds, who joined the company in July this year, has conducted a comprehensive review of company strategy to attempt to stop the rot within the firm, starting with the clearance of excess stock which helped gross margins fall by 43.7 per cent over the half.
Along with re-assessing its product mix, Blacks plans to stop all store expansion, create greater differentiation between its core outlets and its sub-brand Millets, further develop and enhance its own-label products, and perfect its multichannel offering.
Reynolds commented today: “Since August, we have addressed some critical retail issues facing the group, most notably realigning the stock position and strengthening the management team in key functions, while simultaneously implementing a thorough root and branch review of the business.
“While the strategic planning process is nearing completion, it is already apparent that there are multiple opportunities to bring fresh retail ideas and disciplines to the business and more properly exploit its market leadership position, brand heritage and unparalleled brand recognition in the outdoor retail space.
“Notwithstanding the challenges of a difficult economic environment, the potential opportunity for a turnaround is clear.”
A significant shake-up of the retailer’s management over the last few months has not just seen Reynolds replace Neil Gillis, but also long serving Chairman David Bernstein forced out by major shareholder Mike Ashley and experienced rescuer of struggling retailers Peter Williams take his place.
None of this has helped turn around trading so far however, with LFL sales dropping a further 14.2 per cent year-on-year since the end of the first half and margins are currently tracking at around three per cent below the comparative period last year.
The company has now exited its Boardwear brand, which had been loss-making for a number of years and the five remaining Freespirit stores have been formally rebranded under Outdoor fascias.
Banking facilities were extended and increased during the period to £40 million due to losses but will revert to the core £35 million facility on December 15th 2011.
Williams added: “Under new leadership and with a fresh strategy and significantly enhanced retail expertise, there is a real opportunity with the right funding structure for the business to re-establish its forward momentum.”