Blacks Leisure, the surfing to camping-gear retailer, today admitted that it is reviewing the future of its boardwear business after giving warning that losses during the first six months of its year will balloon to £4.5 million.

The company, which counts Mike Ashley, the soon-to-be former owner of Newcastle United, as its largest shareholder, said the business had experienced a sharp slowdown in trading during August, predominately in boardwear where like-for-like sales slumped 16.1 per cent.

Blacks said business at its outdoor division, which trades on the high street through Millets, was "broadly in line with expectations" with like-for-like sales down 5.2 per cent against a 5.6 per cent rise in the same period last year.

Overall, like-for-like sales for the six months fell by 7.7 per cent. Blacks expects to announce pre-tax losses of £4.5 million, compared with a £600,000 interim loss last year, on October 31.

Neil Gillis, chief executive of Blacks who joined the group 10 months ago, has been attempting to turn around the business which he described in May as "a bit dowdy, a bit drab and old-fashioned". Blacks can trace its history back to 1863 when Thomas Black established a sail-making business in Greenock on the Clyde.

Mr Gillis said today that Blacks is reviewing the future of its boardwear business and is "looking at every option" but admitted that the company had not spoken to any potential buyers about a sale of the division.

Mr Gillis said boardwear was as a relatively small part of Blacks' overall business but said it had a tendency to dominate its results.

After joining, Mr Gillis discovered a £2 million black hole due to accounting "discrepancies" in its Sandcity boardwear division. Blacks has since integrated Sandcity with its other boardwear group, Freespirit, at a cost of £1.2 million.

Mr Gillis cited poor weather and a reduction in consumers' discretionary spending for the sharp slowdown in trade during August but he said that business in September had picked up.

The company is now focusing on its "important" fourth quarter when its sells winter goods and skiwear. Blacks said today that it is continuing to cut costs ahead of expectations, with £5.6 million already delivered, and it is managing its stock levels, which are 12 per cent below the same period last year.

Shares in Blacks fell 10p to 79.5p in early trading.

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