Struggling Blacks Leisure is forced to put itself up for sale

The firm, which issued the latest in a raft of profit warnings two weeks ago, said its adviser KPMG has started a sale process after shareholders indicated they would not back another capital raising.

“Given the current level of debt within the group (£36m) there can be no assurance that any sale would attribute value to the ordinary shares of the group,” it said.

“The group continues to be in constructive discussions with its lender, Bank of Scotland, which is supportive of the proposed sale process, which the directors are seeking to conclude during January.”

Many retailers are struggling. Consumers are feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and Government austerity measures.

Blacks Leisure, which sells walking boots, camping equipment and ski jackets from 306 Blacks Outdoor and Millets stores employing 3,500 staff, said it had met a number of potential new investors.

Blacks’ largest shareholder is Sports Direct, Britain’s biggest sportswear retailer, controlled by Newcastle United soccer club owner Mike Ashley.

In a disclosure to the London Stock Exchange later yesterday, Sports Direct said it had lifted its stake in Blacks Leisure to 22.48 per cent from 21.3 per cent.

Mr Ashley has considered bidding for Blacks and is understood to have proposed a joint venture with the firm as an alternative to supporting an equity raising.

Sports Direct declined to comment.

“The problem with Blacks has always been that the Millets chain is a millstone around its neck,” said independent retail analyst Nick Bubb.

“All eyes will now turn to see what Sports Direct will do, but its strategy will probably be to pick up what it wants from the receiver in January.”

Discounting is rife on UK high streets. Video games retailer Game and fashion retailer French Connection issued profit warnings last month.

Blacks came close to collapse in 2009, but survived after a rescue deal with creditors that saw it close some 100 stores.

Analyst Peter Smedley said: “The group is simply running out of time and options, albeit management states that its bankers BoS remains supportive of the proposed sale process. Today’s statement reveals the starkness of options facing the group.”