Blacks Outdoor performs broadly in line with expectations
Blacks Leisure Group plc announced half-yearly results for the 26 weeks ended 30 August 2008. David Bernstein, Chairman, said: "During the first half the Group made good progress with the initial phase of its turnaround plan. The Outdoor business delivered an encouraging performance against challenging comparatives and we are pleased with the performance of the new Outdoor store formats, which will now be rolled-out steadily across the estate. Boardwear continues to be a very difficult market and we are examining all options for this business.
We are encouraged by this better start to the second half and our plans for restoring sales growth to the business will be the key focus for the remainder of the current year and into 2009. The outlook for the remainder of the year will be influenced by trading over the important Christmas period and possibly, wider economic factors."
Chairman's Statement : During the first half the Group made good progress with the initial phase of its turnaround plan against a background of a mixed trading performance. The Outdoor business performed broadly in line with expectations, recording a like for like sales decrease of 5.2% against a strong comparative in the previous year of 5.6% growth. This performance was achieved despite the negative impact of weak trading towards the end of July and most of August.
The Boardwear market, however, continued to be very difficult and the performance of this business has been below expectations, with like for like sales falling by 16.1%. Group like for like sales were down 7.7% (2007: increase of 3.0%) in the first half. The Group continues to make good progress in driving further cost savings in the business. The level of savings achieved to date is ahead of original expectations with a year on year reduction of £5.6m already delivered.
In addition, working capital continues to be managed very effectively, with stocks at the half year being 10.5% below the same point last year. Furthermore, we continue to work comfortably within our bank overdraft facilities with period end cash overdraft of £1.7m (2007: £0.6m).
We are currently reviewing the various strategic options relating to the Boardwear business. In this respect, the O'Neill business formerly based at Washington (Tyne and Wear) has already been relocated and combined with the larger Boardwear business, and is now operating from the Group's Northampton head office with a reduced level of overhead. We have also entered into negotiations with O'Neill Europe to terminate our wholesale business early and these discussions are progressing well.
Group results - Group sales in the first half decreased by 9.4% to £133.0m (2007: £146.8m). Like for like retail sales decreased by 7.7% (2007: increase of 3.0%).
A gross margin of 54.0% was achieved in the period (2007: 54.5%). The underlying margin was stronger than last year, especially in Outdoor, but was adversely affected by the poor trading performance from the Boardwear business where a greater level of discounts had to be applied to the end of season sale to clear stock.