One of the country’s leading outdoor retailers faces a crunch meeting at the end of this month when it will ask its property landlords and shareholders to approve a survival plan.
Blacks Leisure, which owns both the Blacks and Millets shops on many high streets, faces going into administration if its creditors refuse to accept a Company Voluntary Arrangement. The deal would see a fund set up to pay off part of its debts from the stores it is closing, and new arrangements with landlords of its other shops.
Blacks Leisure can trace its history back to Greenock sail-maker Thomas Black who started manufacturing tents in 1861. The present company was incorporated 52 years ago but Blacks and its associated The Outdoor Group are now saddled with more than £230m of debt, much of it due to the failure of its boardwear fashion ventures.
A company statement said: “The aggregate annual rent and service charge and insurance exposure under the leases relating to the closed or closing stores amounts to approximately £13.8 million. The view of the directors is that this ongoing exposure is too great for the group’s business to support and, if left unaddressed, these costs are likely to force Blacks Leisure Group and The Outdoor Group into administration or liquidation.”
Blacks proposes a fund of £7.25m for its landlords, with payment being made in two parts. The company’s other creditors, including major names such as Berghaus and The North Face and many smaller suppliers, are not covered by the proposed CVA.
Corry Taylor, chairman of the Outdoor Industries Association, said: “The Company Voluntary Arrangement announcement made by Blacks earlier this week confirms what many in the industry were expecting.
“With the CVA meeting scheduled for late November, the industry will soon know what the future will hold for the largest retail player in our sector. A ‘yes’ vote will allow the company to restructure and give it a sporting chance of surviving. A ‘no’ vote will see it go into administration, with many staff losing jobs, suppliers losing money and another round of speculation over who will buy the business from the administrator.
“The OIA will continue to closely monitor the situation as it develops and, as required, we will offer support and advice to those businesses and individuals who are affected.
“The situation at Blacks, although by no means unique in the wider business community, does not reflect the overall health of outdoor industries in the UK. The current economic climate is certainly proving to be challenging for everyone, but the sector is performing well relative to others and I think that it is important to remember that context when assessing the difficulties that Blacks finds itself in.”
Andy Barker, country manager of The North Face, added: “Blacks has had, and I believe continues to have, a place on the high street as well as in outdoor retailing. It’s been clear that parts of the business have simply not been performing, the major problem being in the boardwear divisions, the other from what have been classed as exceptional circumstances.
“As a consequence, the outdoor side of the business, as well as the turn-around strategy in which ‘Cool air’ plays a significant part, has been diluted.
“I believe the CVA strategy addresses the key aspects that could and should allow Blacks to not only stabilise the business but to also help it become more sustainable for the future, by eliminating some of the exceptional trading risks that brands have had to take during recent uncertain times. Certainly from a brand perspective, most importantly it will allow more accurate and confident planning and forecasting.
“All things considered, the alternative options could have been less favourable, leaving brands to make potentially damaging decisions of how to make up lost turnover.”
The two meetings for shareholders and creditors will take place on 23 and 24 November.