RETAILER JD Sports has warned the Blacks Leisure business it rescued from administration will cost it up to £15m in this financial year.
The sports and fashion retailer said Blacks, which it bought for £20m in January, could suffer £10m operating losses and up to £5m of restructuring charges as it bids to revive the business.
While it believes Blacks can return to profit in the medium term, Seymour Pierce retail analyst Freddie George warned this is unlikely until 2015 at the earliest.
JD, which has already closed 81 of the worst performing Blacks stores as it looks to eliminate a high rent bill, said its immediate priority was to “significantly improve” the appeal of the chain to customers.
The update on Blacks came as JD, which operates about 355 JD Sports and Size? outlets in the UK, said trading had improved slightly in recent weeks but warned margins were under pressure amid fierce discounting.
Like-for-like sales were up by 1.5% in the 19 weeks to June 9, which represents a rise of about 1.8% over the past 10 weeks and comes despite poor weather.
The Bury-based group said its fashion-based stores – Bank and Scotts – lifted underlying sales by 3% in the 19-week period.
That outperformed its sports stores, which were up 1.2%.
Despite the announcement, shares in JD Sports closed JD Sports up 3.5p at 615.5p or 1%.