Poor Christmas sales of surfing and snowboarding gear today led outdoor clothing and equipment retailer Blacks Leisure to warn the third time in a year that its operating profits will miss market expectations.

The group revealed more evidence of the bleak outlook on the High Street, reporting overall losses of 3.9% in the 18 weeks to 3 January. The harshness of the economic climate was reflected by the fact that Blacks described its outdoor business “performing strongly” when its like-for-like sales were down only 0.5%. But the results were undermined by boardwear sales over the period, which slumped 19.2%. Blacks, which has 421 outlets in the UK under the brands Millets, Blacks Outdoor, FreeSpirit and O'Neill, described sales in the FreeSpirit stores as “diluting” its performance.

The group plans to convert 10 FreeSpirit stores — a quarter of the estate — into its more profitable Blacks Outdoor brand, which sells walking and camping equipment.

“I'm pretty pleased with the outdoor figures, which make up about 80% of our business — especially compared to other retailers' results. With sales down less than 1% on last year's figures, it's performing really well,” said Blacks chief executive Neil Gillis. “But the boardwear division is performing very badly, which is why we're converting a quarter of the FreeSpirit stores. If that works, we'll convert more. In the current environment, it's unlikely we'd be able to sell our boardwear arm, so might as well just use the stores to roll out more of our Outdoor brand. The overall picture is good, we've just got to focus on sorting out the boardwear division.”

The plans Blacks revealed today to convert some of its stores follow the retailer's December announcement that it would try to reduce the impact of boardwear on its sales by transferring its operation of the O'Neill wholesale business in the UK to O'Neill Europe. At the time, Gillis said: “The O'Neill wholesale business falls outside of the group's core retailing expertise. Transfer of the business will free up management resource and reduce the group's working capital requirement.”