The group, which owns the Blacks and Millets brands, said sales were lower than expected in the last few weeks, prompting it to lower prices in a bid to attract more customers.
The company, which sells walking boots, camping equipment and ski jackets, also said it would need more cash.
The news comes just a month after the group reported a first-half loss of £16m.
It said it was considering financing options, including strengthening its capital structure.
Analysts at Numis Securities, who forecast an annual pre-tax loss of £23.3m, said: “Current weak trading puts additional pressure on the company to raise cash and we are unconvinced that investors and lenders will be willing to provide support.”
Blacks’ largest shareholder is Sports Direct, the UK’s largest sportswear retailer controlled by Newcastle United soccer club owner Mike Ashley, with a 21.3 per cent stake. He has previously considered bidding for Blacks.
Low confidence and squeezed consumer spending, driven by high prices and a bleak economic outlook, mean the group expects its Christmas and full-year performance to fall below expectations.
Kate Calvert, retail analyst at Seymour Pierce, maintained her sell recommendation and said: “We believe it will remain a challenge to come up with an acceptable solution for the company’s long-term future.”
Like other clothing retailers, Blacks has been hit by the warm weather in October and November. Much of its clothing, such as fleeces and waterproof jackets, caters for harsher weather conditions.
Blacks reported a 7.2 per cent decline in like-for-like sales in its half-year results, covering the 26 weeks to August 27 and yesterday confirmed that conditions have got worse.
The Millets and Blacks brands are to be revamped to achieve greater differentiation between the two chains, with further development of own label and own brand merchandise. Blacks has seven stores in Yorkshire and Millets has six.
The company said constructive dialogue had been maintained with its bankers.