Blacks Leisure is suspending board director Darren Spurling and launching an investigation into what it calls "accounting discrepancies".

The latest embarrassment to hit the beleaguered retailer comes just weeks after the appointment of Neil Gillis as chief executive.

Gillis, formerly of Linda McCartney Foods and Esporta Health Clubs, uncovered "the funny figures" at the Sandcity subsidiary that distributes the O'Neill Boardwear brand.

An internal review found "some discrepancies in the Sandcity management accounts", according to a statement to the stock market. The amount in question is £2 million, but it is not yet clear if this is a police matter.

"The board has taken action which it felt necessary in the circumstances," said the company.

Spurling joined the board in 2002. BDO Stoy Hayward, the auditors, have been asked to establish "the nature and extent of the problem".

The news is likely to be greeted with fury by Mike Ashley, the Sports Direct and Newcastle United boss who has a 29% stake in Blacks.

Ashley launched an attempt to sack the entire board last summer as his irritation at the company's performance grew.

He later withdrew his threat after being reassured that directors would not sell the surfing brand Freespirit as they had intended. Sandcity operates in the same market at Freespirit, yet retains its own management.

Russell Hardy was forced out as chief executive last year after a string of profit warnings.

Blacks share price has tumbled in the past few years, and fell another 17p to 114p today, leaving the company valued at £48.5 million. Blacks insisted today that its recovery plan is "unaffected by these developments" although it admits profits will take a hit.

The company is the largest seller of outdoor clothing in Britain, also owning the Millets brand associated with climbing boots and sleeping bags.

Gillis has a strong reputation, but is regarded as an unusual character. He admits to being an exhibitionist - once giving a presentation at a conference in the nude, another time dressed as rap star Eminem.

He told an interviewer: "The reason I presented naked was we have all these checks in the our business and we don't want to get exposed. The point I was making is: I'm exposed and this is how you're going to feel if you have a quality audit and something is missing."

Sandcity is now likely to be merged with Freespirit, suggesting that there will be job losses.