For Subscribers

Get the complete article now!

TWST: Could we begin with a brief historical sketch of Blacks Leisure Group (LSE: BSLA.L) and a picture of things as they are now?

Mr. Hall: If you go back 3-4 years ago, which was actually around the time I joined the Group, then it consisted of First Sport, AV, Blacks Outdoor and O’Neill, with First Sport and AV being focused on the sport and fashion side of the business, Blacks Outdoor being on the more historic outdoor and camping side, and O’Neill being a board sports brand. Indeed at that stage, we also had Fila UK as a 40% associate focused on the sports business. I joined in March 1999, and in December of that year we acquired The Outdoor Group, which consisted of Millets, Freespirit and Air, and again was very much focused on the camping and outdoor side. We combined that with Blacks Outdoor and formed what was then known as Blacks Outdoor division and left First Sport and AV focused on the sports market or what we called the Sport & Fashion division. Those two divisions were the biggest with approximately 40% in the sport and fashion side, 30% on the outdoor side and then O’Neill and Fila representing about 10% each. Subsequently, in July 2000 we disposed of the Fila business, selling it back to Fila International. And then in May of 2002, we sold Sport & Fashion, which consisted of First Sport and AV, to JD Sports who were probably the number five player in that market in terms of size. We were in fact the number six player, but that disposal enabled us to then focus on Outdoor and O’Neill. That brings us right up to speed. We are now a smaller and more focused company that, as a result of the disposal of Sport & Fashion, has virtually no gearing, has banking facilities as required for its working capital during the year, and is in a position to expand going forward. The other change was at the management level. Simon Bentley, the former Chief Executive, in a sense had grown up with the sports business side and he recognized that the Outdoor Managing Director was probably the best guy to run the business going forward as Group Chief Executive. And that change did in fact happen. It also meant we could remove the cost of the Group Head Office by merging it into the outdoor business based out of Northampton and that has given us both better communication and more efficiency.

TWST: How would you summarize the game plan then for the next two to three years?

Mr. Hall: Going forward, I think probably the other area worth mentioning is our brands generally in that we clearly have shown in our outdoor business that we not only have the potential to develop retail formats, but also own label brands like Peter Storm and Eurohike. If we can spot opportunities to either acquire or develop outdoor brands within those retail formats, we will continue to do that as it gives us more flexibility and presents a profit and margin opportunity. With that said, we would not want to end up at 100%. It is very important for us that there are a significant number of other brands in there to give a good range for the customer to choose from. Then if you take that to the boardwear side, clearly our experience with O’Neill where we have grown something with a heritage that was a very small turnover and profit into a significant player, if we could spot an equivalent to O’Neill, acquire them and develop them going forward then that would be extremely good news, particularly because we already have the infrastructure and the sales team there to make that happen. Likewise within Free Spirit, we will endeavor to grow our own label brands. For the moment it is virtually 100% third party branded, but if we get the chance to develop something like, for example, Standard Deluxe, then we will look very closely at that. Standard Deluxe is a brand we acquired a couple of years ago and has a heritage from the Newquay Southwest surfing area of the UK. If we develop a good range, which we will be doing through this autumn-winter, and if that proves to be successful then we will hope to go further. Those are probably the key organic opportunities within those markets.