Blacks relaunches fundraising and reports loss
30 April 2010 13:46
After a "difficult" year, Blacks Leisure is relaunching a £20 million fundraising plan to accelerate its turnaround strategy. The group was forced to abandon an earlier attempt to raise funds after Mike Ashley's sportswear firm Sports Direct, a major shareholder in Blacks, threatened to veto them. Blacks has restructured its latest attempt to require a simple majority of shareholders to approve the plan. Last time, it needed the support of investors owning 75% of its shares.
Blacks made the announcement as it reported a loss before tax of £46.9 million for the year to February 27th compared with a £6.6 million loss the previous year. The retailer closed over 100 stores during the period.
Sales for the year rose by 5.4% on a like-for-like basis, with sales growth in the second half up by 9.5%. However, group sales for the year fell by 7%, reflecting the smaller size of the business.
Like-for-like sales from the ongoing business in the first six weeks of the new financial year are in line with strong comparatives from the same time last year.
The cash injection will be used to fund growth, including opening 35 new stores and refurbishing existing sites.
Commenting on the planned fundraising, chief executive Neil Gillis said: "We are delighted to announce another fundraising so quickly after the abandonment of the group's proposed February fundraise and the subsequent approach from Sports Direct. The fundraising proposals being announced today will enable us to pursue the crucial growth phase of our recovery plan. The proceeds will underpin a selective expansion of our outdoor retail estate by the addition of up to 35 new stores, in towns where we have previously traded successfully or which currently lack an outdoor retail offer, and accelerate the refurbishment of our core estate which has suffered from years of underinvestment. The proceeds will also enable the Company to cancel its seasonal peak working capital facility. Following the fundraising, Blacks Leisure will be in a stronger position than it has been for a number of years to realise the potential of its market leadership position in outdoor retail and deliver returns to shareholders".
Chairman David Bernstein said: "The group has made progress in what has been a difficult but ultimately productive year. As a result of the CVAs, the group is ready to accelerate the final phase of the turnaround plan, with the net proceeds from the fundraising announced today being used principally to invest in the current estate and to open new stores in towns and cities where we are not currently represented".
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