Sales of Blacks Leisure Group fell by 9.1 percent to reach £267.6 million (€310.5m-$435.6m) for the fiscal year ended Feb. 28. The loss for the year was £14.4 million (€16.7m-$23.4m), compared with a loss of £9.3 million (€10.8m-$15.1m) in the previous year, but that includes impairment, lease and restructuring charges of £7.6 million (€8.8m-$12.4m). The gross margin rose by 0.6 percentage points to 54.3 percent.
The company says in the wake of these results it is going to make some changes, overhauling the store portfolio and reducing its overhead base.
The outdoor division, which includes Blacks and Millets, maintained a sound performance compared with last year, recording an operating profit of £6.3 million (€7.3m-$10.3m), down from the £7.3 million (€8.5m-11.9m) of last year but still positive.
This figure includes £2.1 million (€2.4m-$3.4m) in exceptional items. The company said the income figure reflects continuing progress on product availability, improved transitional ranges and success in meeting customer needs. The decline against the previous year came about in the latter part of the financial year when the economic climate worsened. Outdoor gross margins were slightly better year on year.
The boardwear segment didn’t fare so well. The division, comprising the Freespirit and O’Neill stores and the U.K. wholesale operation of O’Neill product ranges, reported an increased operating loss of £7.8 million (€9.1m-$12.7m) against a loss last year of £3.3m (€3.8m-$5.4m). This was before £5.5 million (€6.4m-8.9m) in exceptional charges.
As announced in December, Blacks will transfer the operation of the O’Neill wholesale business in the U.K. to O’Neill Europe after the spring/summer 2009 season. It has also rebranded eight boardwear stores to an outdoor format. Blacks said that the newly converted stores have shown promise, and the company is keeping a close eye on them before it makes a decision on the future of the remaining boardwear stores.
Overall, the group reported an operating loss £4.4 million (€5.1m-$7.2m) compared with a £2.2 million (€2.5m-$3.6m) profit last year, not including exceptional items. Figuring in these items, the operating loss was £12.0 million (€13.9m-$19.5m) against £7.4 million (€8.6m-$12m) last year.
A £35 million (€40.6m-$57m) banking facility from Lloyds Banking Group has been extended until Aug. 31. Blacks said that its directors are going to have to determine if the company can continue to operate, and that it is in discussions with Lloyds regarding provisions that would help the group to accelerate both the exit of the loss-making boardwear business and the development of the outdoor store portfolio.
For the 12 weeks up to May 23, Blacks' sales fell by 4.6 percent on store closings, and comparable store sales fell by just 0.5 percent. For this period, the outdoor division reported a 1.2 percent increase in comparable sales, but boardwear fell by 10.1 percent.
The gross margin was down, at 52.3 percent, reflecting a strategic decision to increase promotional activity to drive sales growth. The first-half outlook will depend on the key second quarter and the performance of Blacks’ camping and summer clothing lines.