Blacks Leisure warns on profit, needs cash

LONDON - Outdoor goods retailer Blacks Leisure (BSLA.L) faces a battle to survive after becoming the latest British retailer to issue a profit warning in the run-up to Christmas, saying trading conditions had weakened further in the past few weeks.

Blacks Leisure

Shares in the company, which sells walking boots, camping equipment and ski jackets from 306 Blacks Outdoor and Millets stores employing 3,500 staff, slumped Friday after it also said it needed cash.

Blacks, which last month posted a first-half loss of 16 million pounds, said it was considering financing options, including strengthening its capital structure.

"Constructive dialogue has been maintained with the group's bankers, Bank of Scotland (LLOY.L), who continue to be supportive," it said.

However, with competition intense, analysts feared for the future of Blacks, which agreed a temporary extension of its bank loan arrangements in July, and Blacks shares were down 23 percent at 3.375 pence at 1015 GMT.

"Current weak trading puts additional pressure on the company to raise cash and we are unconvinced that investors and lenders will be willing to provide support," said Numis Securities analysts, who forecast a full-year pretax loss of 23.3 million pounds.

Blacks' largest shareholder is Sports Direct (SPD.L), Britain's largest sportswear retailer and controlled by Newcastle United soccer club owner Mike Ashley with a 21.3 percent stake. He has previously considered bidding for Blacks.

said continuing downward pressure on consumer spending and confidence meant "the group is experiencing lower than expected sales and has been taking action to manage margins in order to drive sales."

When Blacks updated the market last month it said sales at stores open over a year had fallen 14.2 percent in the first eight weeks of its second half, with margins down 3 percentage points.

Britons have been feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, and as they worry about a stagnant housing market, job security, a fragile economic recovery and the euro zone debt crisis.

Video games retailer Game (GMG.L) and fashion retailer French Connection (FCCN.L) have already issued profit warnings this month.

Blacks came close to collapse in 2009 but survived after a rescue deal with creditors that saw it close over 100 stores.

By James Davey

(Editing by Rhys Jones and Dan Lalor)

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