Commercial Property News

Outdoor clothing retailer Blacks Leisure Group Plc today said it is seeking to raise £15 to £20 million to spend on its stores after an unusually cold winter in the U.K. boosted six-month sales.

The company, which shut 87 stores, put its Sandcity unit into administration and reached a deal with its stores' landlords over rent in late 2009, said it is considering raising between £15 million and £20 million through a share sale in the first quarter of the year.

The money will be used refurbish its existing stores and roll out its Outdoor format, Blacks said. It added it will also consider reopening stores in neighborhoods where sales were high but it paid too much rent. The directors believe Blacks could now get better terms.

The Group now trades from an ongoing estate of 313 stores in two markets. The core Outdoor Division comprises 208 Millets stores and 92 Blacks stores. The Boardwear Division now comprises just 13 stores trading under the Freespirit fascia and represents only 5% of sales from ongoing stores.

A fundraising would also allow Blacks to pay off a high interest £7.5 million loan, it said.

Blacks said today same store sales during the period from Aug. 29, 2009, to Jan. 7, were 12% higher on year. Total sales were £98.9 million, compared with £102 million a year earlier, before the closure of 87 stores and Sandcity's administration.

Outdoor clothing sales rose on a LFL basis 13.1% but boardwear sales fell 4.4%, Blacks said. Total Group sales in the period were £98.9million, compared to £102.0million in the prior period. This reduction is largely as a result of the store closures and the administration of Sandcity Limited.

Neil Gillis, Chief Executive, said: "I am pleased to announce that the Group performed very strongly through its peak trading period, with a healthy and consistent recovery in like-for-like sales growth underlining both the fundamental strength of the Group's offering and the recovery potential of the core estate following the approval of the CVAs in late 2009.

"Proceeds from the potential fundraising being announced today would allow us to accelerate the roll-out of our successful new retail formats, refreshing our estate and expanding it on a selective basis as we focus on realising the potential of the Group's market leadership position in outdoor retail. Following the restructuring measures taken in 2009, Blacks Leisure is now a significantly stronger business and is better placed than it has been for some years to build on this recovery."

Shares in Blacks, which have risen by about 46% in the last three months on recovery hopes, closed on Friday at 49.75 pence, valuing the business at £21.2 million. In November the firm was saved after creditors backed a company voluntary arrangement (CVA) and £42.5 million of new facilities were released by Lloyds Banking Group.