Blacks Leisure shares slump on appeal for bidder
- 7 December 2011
- From the section Business
Shares in Blacks Leisure fell 50% after the retailer issued an appeal for a white knight investor to rescue it by buying the firm or one of its brands.
The troubled camping and outdoor clothes retailer said it was making the appeal after meeting major shareholders and investors to raise capital.
Blacks warned last month that sales in the crucial Christmas period would be weaker than had been expected.
Management are targeting a sale by January, the company said.
Blacks warned that shareholders may not gain if the ailing business is sold.
Matthew Stych, a retail analyst at Planet Retail thinks that Blacks has been subject to increasing competition on price.
"Supermarkets have certainly played their part in Blacks' current predicament," he said.
He points to online retailers like Amazon and out-of-town outlets like Decathlon who also undercut Blacks on price.
Mr Stych thinks the company is unable to compete with specialists such as Snow & Rock on the instore consumer experience: "Customer service is one of the few differentiators that High Street based retailers have left these days," he said.
Having no clear idea of what the brand represents is also a problem for the ailing retailer according to brand expert Tim Hipperson.
"Is it a hiking/camping store, or does it cater to extreme sports enthusiasts? No-one is really sure," he said.
Mr Hipperson thinks Blacks should have been a beneficiary of the trend in the UK towards staycations and healthy living.
"The brand has lost touch with its customer base and due to its lack of definition is not attracting new shoppers," he said.
The company said it had the support of Bank of Scotland, its main lender.
"Given the current level of debt within the group, there can be no assurance that any sale would attribute value to the ordinary shares of the group," a company statement warned.
Blacks currently has £36m of net bank debt.
The firm has appointed accountants KPMG to find potential buyers.
It said it had obtained a waiver from the takeover panel to ensure that any potential buyer can remain anonymous and avoid rules that would normally compel it to make a formal offer within 28 days.