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Super Massive Black Hole


Posted At: 29 September 2009 00:53 AM
Related Categories: Retailers


Poor old Blacks. Its not looking good for them is it, really? Just days after appointing administrators to its Sandcity division, it’s been rumoured that they are seeking a Company Voluntary Arrangement in a final attempt to turn things around.


The board division has been sinking (excuse the pun) for some time now, and attempts to sell back at the start of the year failed.


Our Financial Health Progression, based on BIS P2 health scores, shows a steady decline in Blacks Leisure Group's financial health from 2005 onwards, and in more recent months, things have gotten worse and worse. There has been a myriad of negativity reported in the press (profit warnings, banking covenants breaches) and bizarre attempts to rescue the chain (launching up-market fascias - ALS, anyone?!) have failed.


I suppose hindsight is a wonderful thing, but I believe the downfall of Blacks Leisure can be blamed on 2 basic things; their customer base is unreliable and they failed to review their SWOT analysis; their strengths remained the same but became outdated, they failed to grasp opportunity with both hands and the threats became too many...

  1. Product offering
    Skate and surf fashion culture has declined from mainstream visibility in recent years, having had its hay-day in the 90s/early naughties
  2.  Unstable factors influencing supply/demand
    Bad weather, fluctuations in things such as the music industry, and recessions can all affect Blacks customers in a positive or negative way. For example, in 2006, there was no Glastonbury festival, instantly removing a potential 150,000 people from the customer pool 
  3. Price positioning
    Failure to respond to pressures from competitors; Tesco and Wilkinson’s have both increased market share in the outdoor sector, with both offering a much lower base price on basic essentials such as tents. While it is true that Blacks’ target customer is typically more affluent, there is no reason a lower-priced range couldn’t have been introduced to capitalise on the growing festival market – known for its dump and go attitude to camping accessories – 4. Failure to recognise opportunities

So what is the future? If the CVA is agreed to, around 80 Blacks, Millets and Free Spirit stores could be lost, along with up to 400 jobs. A sale of its 11 O’Neill stores currently in Administration is unlikely, considering no one wanted them back in February, and if the loss-making stores aren’t disposed of, Lloyds won’t waive the covenant breach that is soon likely. A lot of ‘if’s’’ in there, isn’t there.


Whatever happens to Blacks, I hope they remain in some way or another; there would be a huge gap in the market without them, and its not one that I really want to see Tesco fill – because lets face it, if anyone will jump at the chance, it will be them, and Tescopoly is already big enough, thanks.


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The opinions expressed herein are the personal opinion of the author and are not intended as statements of fact and do not represent the view of SnapShop or Pragma in any way.


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