Low sales and a generally tough economic environment have prompted outdoor products retailer Blacks Leisure to issue a profits warning this morning.
The embattled retailer said that full-year profits will be below previous expectations and reiterated its need for additional funding if it is to execute its strategic plans over the coming 12 months.
Blacks’ statement indicates that it is considering other financing options, which include strengthening its capital structure to ensure that the appropriate platform is in place to aid the business’ turnaround.
It also said that Bank of Scotland, the group’s main banker, continues to be supportive of the company.
Reflecting on current trading conditions, the statement continued: “The group reported in its interim results for the 26 weeks ended August 27th 2011 that it continued to experience challenging trading conditions in a tough economic environment.
“In line with many other retailers, the group has noted that these conditions have weakened in the last few weeks as a result of continuing downward pressure on consumer spending, particularly discretionary spending, and consumer confidence.”
Contrary to most other retailers, Blacks could find itself favouring a snowy Christmas, with many of its ranges suitable for cold weather conditions.
Indeed, the business acknowledged today that its full-year trading outcome is “substantially dependent” on a successful festive period, but with economic conditions as they are it has made the decision to warn on profits prior to retail’s busiest time of the year.
New CEO Julia Reynolds, who joined the company from online lingerie retailer Figleaves.com earlier this year, will have her work cut out to help get Blacks back to its previous heights.
Pre-tax losses at the group, which owns the Blacks and Millets brands, more than doubled to £16 million in the first half of its financial year, while like-for-like sales slid 7.2 per cent to £81.1 million.
Reynolds has been tasked with improving the business’ multichannel operations, as well as re-assessing its product mix, but today’s warning suggests a tough task lies ahead.
Blacks will publish a post-Christmas trading update in January 2012, when investors will to see how the gift-buying season affected sales.