Blacks hopes cash from the share offer will help it build on strong winter sales to walkers

Outdoor retailer Blacks today announced plans to raise more than £20m to finance the opening of 35 new stores.

The company, which operates both Blacks and Millets High Street shops, says the move is the latest in its recovery plan, which last year saw it close 89 unprofitable stores and complete a company voluntary arrangement with its landlords.

Blacks hopes to raise the cash through a share offer and placing – selling shares through an intermediary – which will see more than 40m new shares created. The proposals will need the approval of existing shareholders.

Chief executive Neil Gillis said: “The fundraising proposals being announced today will enable us to pursue the crucial growth phase of our recovery plan.

“The proceeds will underpin a selective expansion of our outdoor retail estate by the addition of up to 35 new stores, in towns where we have previously traded successfully or which currently lack an outdoor retail offer, and accelerate the refurbishment of our core estate which has suffered from years of underinvestment.

“With a clear and well financed recovery plan now in place, Blacks Leisure is in a stronger position than it has been for a number of years to realise the potential of its market leadership position in outdoor retail and deliver returns to shareholders.”

Blacks operates 208 Millets shops and 92 under its own brand. It employs almost 4,000 staff in its stores and at its headquarters and distribution centre.

A company statement said: “The group’s business had been profitable for many years, but in 2006 the group’s performance declined to a loss-making position despite relatively favourable economic conditions. Several components propelled the business from profitability into loss-making, including opening larger out-of-town stores whose sales did not support the higher costs incurred; continued operation of the Boardwear division; a lack of investment in the core estate; and increased costs arising, in part, from the establishment of e-commerce operations and a new centralised distribution centre.”

The shares offer represents the third phase of the company’s ‘recovery plan’ which it sees as vital for Blacks to capitalise on its recent strong sales.