Blacks Leisure is set to go into administration after racking up £36m of debt and a £16m loss in the first half of 2011, with the second half unlikely to be any better.
The unseasonably warm weather has meant that the chain of stores which sell outdoor clothing has suffered from lack of custom – something which has been further exacerbated by the general economic recession.
Blacks Leisure currently operates 98 Blacks stores and 208 Millets stores which, together, employ 3,600 people.
The company’s share price has plummeted during 2011; falling from about 42p to just over 2p. This means that the market value of the company has correspondingly dropped from around £20m to just £1m – a figure which should be compared to Blacks’ growing debt of £36m. Given that this means that the administrators are unlikely to be able to pay off the company’s debts, a ‘pre-pack’ deal will probably be brokered whereby the company can be sold immediately it enters administration with the slate wiped clean.
That, of course, fails to take into account the consequences of the unpaid creditors.
Sports Direct had previously expressed an interest in buying Blacks.
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