Blacks Leisure to shut 89 shops

Sep 30 2009 By Karen Dent, The Journal

THE outdoor clothing chain in which Newcastle United owner Mike Ashley is the biggest shareholder is shutting 89 of its loss-making shops.

Mr Ashley owns almost 30% of Blacks Leisure, which trades as Blacks Outdoor and Millets. There are Blacks branches in Newcastle, the Metro Centre and Durham, while it trades as Millets in Newcastle, Gateshead, Hexham, Bishop Auckland, Darlington, Middlesbrough and Redcar, plus three outlets in Cumbria. The group refused to reveal which shops would be affected by today’s announcement.

It is the second blow in a week for the group after it called in the administrators to its 11 O’Neill boardwear stores, putting 90 jobs at risk.

Blacks called the stores earmarked for closure a “considerable drag” on its floundering finances. It said: “The vast majority of the stores to be closed have not traded profitably for many years.”

Mr Ashley owns 29.9% of the shares in Blacks Leisure, which is under severe financial pressure and is being restructured to meet the demands of its bankers. It has until the end of October to put its house in order and blamed “recent, unexpected difficult trading” for the new set of problems.

Blacks insisted that the action - which is also likely to cost 50 jobs at its head office in Northampton - was necessary for the group to survive.

It said: “Whilst it is highly regrettable that the company is having to take these steps, both actions will ultimately strengthen the business and help ensure that a successful and profitable outdoor retailer emerges from the current restructuring process.”

The group trades as Millets in 256 shops and Blacks Outdoor in 116 outlets and has started consulting staff about the redundancies.

Multi-millionaire Mr Ashley, who also owns the Sports Direct chain and holds shares in a number of rival sportswear companies including JD Sports and JJB Sports, has been beset by business problems as he struggles to sell Newcastle United for £100m.

JJB Sports and Sports World owner Sports Direct International are now being investigated by the Serious Fraud Office after a referral from the OFT.

The fraud investigation follows an acrimonious battle between Mr Ashley and JJB chairman Sir David Jones over a personal loan.