Blacks cuts losses as turnaround continues
28 October 2010 09:34
Blacks Leisure has reported a reduction in operating losses as its turnaround strategy continues to provide a firmer footing for the once beleaguered business. In the half year to August 28th, the company's losses fell to £7.1 million – equating to a £1.6 million improvement on the same period in 2009. In addition it managed to reduce its central costs by 22% in the first half of the year.
Blacks' decision to enter into Company Voluntary Arrangements (CVAs) late last year, which enabled it to remove 88 loss-making stores from its portfolio, inevitably had a marked effect on sales levels. Across the 26-week period sales decreased by 22.6% to £90.6 million, down from £116.9 million in 2009. However in the calendar year to date it opened 12 new or rebranded stores that are now performing well ahead of target and account for around 10% of the group's total sales. Revenues from its relaunched e-commerce business were also up an impressive 38% in the first half and by 74% in the second half to date.
The company said it had significantly improved its stock position, having taken steps to clear excess spring/summer stock, as committed to before the implementation of the CVAs. It also indicated that discussions regarding the disposal of its remaining 10 boardwear stores were ongoing.
David Bernstein, chairman, said: "The successful implementation of the CVAs in late 2009 enabled the group to rationalise its business and provided the platform for the final phase of the turnaround plan.
"Notwithstanding a difficult period of trading, the Group reduced operating losses in the first half and commenced the final phase of its turnaround strategy through a programme of expansion and investment in its store estate."
Neil Gillis, chief executive, said: "Whilst trading conditions have continued to be very challenging, we are pleased with the performance of our new stores, which are trading above our expectations, and with the progress made with our programme of initiatives to underpin and protect our position as the leading outdoor retailer in the UK.
"The board believes that the combination of these initiatives, together with the continued success of the new store roll-out, should enable the business to achieve completion of the turnaround programme."
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