The new chief executive of Blacks Leisure halved the end-of-year dividend yesterday and said that radical change was needed to restore the camping-to-surfwear group’s fortunes.

Neil Gillis, who joined in December, said that the retailer had to become more fashionable, and shed its dowdy image, if it were to turns things around. He said: “We’ve been a bit dowdy, a bit drab and old-fashioned, yet in the stores the product is fantastic. We have brands like North Face, Berghaus and Oakley – we’ve just been retailing them in an old-fashioned way.”

The group, hit by the discovery of a £2 million accounting black hole in March, reported underlying profits of £300,000 for the year to March 1, up from £100,000.

However, an exceptional charge of £9.6 million, linked to the accounting errors and the closure of 45 stores, meant that the group made a pretax loss of £9.3 million. It added that like-for-like sales in the past 12 weeks had fallen 4.1 per cent below last year.

Shareholders will receive a final dividend of 1p per share, half the amount paid out in 2007. Shares in the group, in which Mike Ashley, the Sports World tycoon, owns a 29.4 per cent stake, rose ¾p to 151p.

Mr Gillis said there were signs of encouragement, with camping gear “flying out the stores” as customers, faced with the higher euro, decide to holiday in the UK. He added that Blacks had seen strong sales from two new-for-mat stores designed to showcase new clothing ranges coming into the business.

However, he admitted it could take three to four years for a full recovery: “I tend to work to that timescale.” Mr Gillis, the former chief executive of Esporta health club chain, is repositioning the group so that Blacks stores become a fashion destination and Millets focuses exclusively on the outdoor pursuits market.

The group’s boardwear business, which runs O’Neill and Freespirit, suffered a £3.2 million loss in the year to March, against a £1.3 million profit the year before. Operating profits in the outdoor business, including Blacks and Millets, rose to £7.4 million, against £2.6 million a year earlier before one- off charges.

Revenue across the business fell 1 per cent to £294.4 million. Blacks discovered in March that margins in the O’Neill business had been overstated by £2 million. Darren Spurling, the director suspended after the discovery of the accounting black hole, has now been dismissed.

Separately, Blacks added that Keith Fleming, the finance director seen as a potential chief executive last year, was leaving. Marc Lombardo, group financial planning director of Greene King, the pub company, will take his place.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange