Critical List: Blacks Leisure

Outdoor specialist Blacks Leisure has hit rough terrain.

The company, which started selling tents in 1905, built up an empire of more than 350 Blacks and Millets stores nationwide as it profited from our love of outdoor pursuits. But not even the clamour of festival types for two-person tents and Hunter wellies has sheltered Blacks from the recessionary storm. With sales on the slide, it's now desperately trying to cut a deal with its landlords to ensure its survival.

Danger signs:
Blacks' shares have lost 90% of their value in the past three and a half years, so its problems are not all recession-related. The downturn is only the latest in a string of woes, including boardroom spats. Sports Direct boss Mike Ashley, who bought a 29% stake in 2006, threatened to have his fellow directors sacked over plans to sell its Freespirit division, while in July, deputy chairman Claude Littner and non-exec Andrew Mallett were forced out. To add to the confusion, it has since emerged that Ashley's stake now belongs to the administrators of collapsed Icelandic bank Kaupthing. But trading has also fallen off a cliff: in August, Blacks admitted that a sudden downturn in sales had left it in danger of breaching its loan covenants with Lloyds Bank. It swiftly put boardware subsidiary Sandcity into administration and cut 50 head-office jobs. But unless it can pull off a controversial restructuring plan, it could be out in the cold.

Landlords are being asked to support a voluntary arrangement that will allow Blacks to jettison 89 unprofitable stores (including its struggling O'Neill boardwear division) without entering administration. But they're not happy about it. Although Blacks is trying to sweeten the deal with a £7m compensation pot (equivalent to about six months' rent), it could still struggle to get the 75% of votes it needs. And even if it does survive the current turmoil and sorts out its boardroom wrangles, will cash-strapped Britons really be buying many tents and hiking boots in the coming months?

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