Millets branches are among the stores JD is looking to turn around

The new owners of the Blacks Leisure group said they expect the business to suffer by up to £15m as it struggles to turn around the failed chain of outdoor retailers.

JD Sports said its immediate priority for the stores, which include Millets as well as Blacks shops, is ‘to significantly improve the customer proposition’.

Overall figures for JD Sports which operates its eponymous stores, Champion, Chausport, Bank, Sprinter, Cecil Gee, Scotts and Size shops, said its sales had increased marginally by 1.5 per cent. The company said pressure on its profit margins in an ‘offer-driven market’ would dent its results.

But the Blacks group continues to be a problem for JD Sports.

In its interim management statement issued today, Wednesday, it said: “Blacks delivered an operating loss of £2.2m in the three weeks post acquisition to 28 January 2012, reflecting the lack of stock in the business and the inheritance of an excessively large and over rented store portfolio, together with a disproportionate central cost which will not be fully eliminated until early in the next financial year.

“We are presently continuing to address the significant operating issues in turning round the business.

“The anticipated level of the operating loss in the Blacks business in the current year is £10m with the potential for a further up to £5m charge for restructuring.

“The bulk of the operating loss in Blacks will occur in the first half.

“Whilst the business continues to restructure its store portfolio and operate with legacy buying decisions, it is difficult to be more precise on the short term outlook, but we remain of the view that Black’s market position can be exploited profitably in the medium term.

“Our immediate priority is to significantly improve the customer proposition.”