- guardian.co.uk, Tuesday March 18 2008 11.54 GMT
Photograph: Newscast
Shares in outdoor clothing and camping specialist Blacks Leisure plummeted today after it admitted that it had discovered accounting irregularities which will wipe £2m from its profits.
The company said it had suspended a board director, Darren Spurling, and warned that pre-tax profits will fall £1m short of analysts' expectations for both 2007-08 and 2008-09. Shares in Blacks, which is 29% owned by controversial sportswear billionaire Mike Ashley, dropped more than 11% this morning but later recovered to trade down 7.75p, nearly 6%, at 123.25p.
The company said accounts at its Sandcity business, which sells O'Neill Boardwear, have been overstated by a total of £2m, of which half appears to relate to the year ended February.
Spurling, the managing director of Sandcity, has been suspended and an investigation is continuing.
The news adds to Blacks' troubles. The group, which operates more than 400 outlets and runs the Millets chain, has suffered a slump in sales and new chief executive Neil Gillis admitted in January that all Blacks brands "look a bit tired." Blacks made a profit of just £100,000 last year. Gillis has outlined plans to restore the company's fortunes including job cuts and new store formats.
Blacks said it wants to close Sandcity's headquarters and distribution centre in Washington, Tyne & Wear, and merge the troubled business with the Freespirit operation in Northampton.
