Blacks to unveil £8m losses amid takeover talks

BLACKS Leisure is tipped to post losses of up to £8 million this week as investors await further news on takeover talks.

Shares in the outdoor clothing and camping equipment firm soared 25 per cent on Tuesday after it revealed it was holding discussions with several parties interested in buying some or all of the business.

The revelation comes after Sports Direct International dropped an offer worth 26m in March.

A number of private equity firms are thought to have made approaches. Potential suitors include Lion Capital, the owner of AS Adventure Group, which is parent company to the Cotswold Outdoor chain in the UK, is reportedly behind one of the approaches.

Speculation is also swirling around Mike Ashley's Sports Direct as a potential bidder, given that it is no longer subject to takeover rules preventing a party from returning to a target company for six months. Sports Direct already owns 15 per cent of Blacks. Other major shareholders include Standard Life Investments, which owns just under 10 per cent of the company.

Interest in Blacks comes as the group starts to put a turbulent past few years behind it. It came close to administration last year but was able to strike a rescue deal with creditors.

The restructuring left it with a core estate of about 300 stores after closing many loss-making outlets. The firm is also now cash generative.

However, first-half figures are set to show continued pressure on the chain, which owns brands including Millets, Peter Storm, Eurohike and Alpine Snowsport.

Analysts at Singer Capital Markets are forecasting losses of around 8m as a result of weaker sales and heavy discounting.

But they believe new initiatives - such as the launch of a discount card and guest speaker events in stores - will have started to bear fruit in the second half.

Blacks, founded in Greenock in the 1860s, returned to Glasgow this year as part of a new store opening programme. The company closed its two previous stores in the city late last year as part of the programme to dispose of 87 loss-making outlets. At the time it stressed that many of the branches were trading well but that high rents were making them unviable.

Including its latest openings, the company owns some 320 Blacks, Millets and Freespirit stores across the UK employing 5,500 staff.

Shares in the firm last week closed at 40.75p, up 20 per cent, or 6.75p, over the week.