Blacks Leisure Group announced yesterday that it had ended discussions with an unnamed investor who had made an approach in this regard. The investor is widely rumored to be Mike Ashley, major shareholder of Sports Direct International, which already has a a stake of about 29 percent in Blacks. According to a British press report, another candidate for the acquisition was Lion Capital, the London-based company that has made an investment in American Apparel (see separate story in this issue).
A few days ago, Blacks updated investors about its status since early January. Since then, it has performed as expected, with the outdoor group excelling and the boardwear group continuing to falter. The newly formatted outdoor stores have been 21 percent ahead at the gross profit level since they were converted.
Since the beginning of the year, Blacks has turned eight of its boardwear stores – about a fourth of the total – to outdoor stores and they are doing well; the group will continue the switch in the current fiscal year, which began on March 1.
With Blacks intending to get out of boardwear entirely, it expects an exceptional goodwill impairment charge of about £1.7 million (€1.8m-$2.5m) related to that business. This will get rid of all remaining goodwill for boardwear on the balance sheet. It also expects an exceptional £3.2 million (€3.4m-$4.7m) non-cash provision for onerous leases, related to stores that are slated to be closed, to lower the results for the financial year that ended Feb. 28. During the past fiscal year the group sold or assigned for a shutdown 12 stores, and the economic and retail environment in the U.K. has been worsening.
