Back to base camp for Blacks

Almost four years after Neil Gillis took over as chief executive, the bulk of his turnaround ambition for Blacks remains just that.

Along the way there has been a CVA, fundraising, abortive sale talks and the little matter of a recession.

No wonder Gillis is ready to put on his backpack and head away from the hard country he has trekked since 2007. But where does he leave shareholders standing?

Blacks’ update last week wiped more than a third off the retailer’s share price in a day after like-for-likes slid and new banking arrangements were put in place after the level of debt rose significantly.

The level of resulting concern was evident in FinnCap analyst Dave Stoddart’s decision to slash his price target from 10p to a paltry penny.

If Blacks’ equity is so lowly valued it raises the question of whether it has any future as a public company. The hope is that Julia Reynolds will provide the answer when she replaces Gillis as chief executive at the start of next month.

Her appointment was made in May, and some investors wonder why she has not taken up the Blacks post sooner given the tough situation that she will inherit although on the flipside she should be well-rested and full of energy now.

She will need plenty of it to get a grip on Blacks’ trading challenges and, possibly, to get another round of City fundraising away. Unless there is a clear strategy to create value, investors may baulk at being tapped again.

Where public investors can’t see value, private investors sometimes can. It may only be a matter of time before they are knocking on Blacks’ door.

The failure to sell Blacks earlier this year complicates things. Parties interested then may no longer be, and if they still are, it is unlikely to be at the same valuation.

The turnaround challenge and financial situation may put off some private equity houses, but perhaps an entrepreneur might come up with a map to growth. But what sort of price would they be willing to pay?