Struggling outdoor goods retailer Blacks Leisure became the first major British store group to throw in the towel this Christmas, putting itself up for sale and warning investors the value of their shares could be wiped out in any deal.

The firm, which issued the latest in a raft of profit warnings two weeks ago, said Wednesday its adviser KPMG had started a sale process after shareholders indicated they would not back another capital raising.

Given the current level of debt within the group (36 million pounds) there can be no assurance that any sale would attribute value to the ordinary shares of the group, it said.

The group continues to be in constructive discussions with its lender, Bank of Scotland, which is supportive of the proposed sale process, which the directors are seeking to conclude during January.

Shares in the firm, which prior to Wednesday's update had lost 90 percent of their value in a year, were down 50 percent at 1.975 pence at 4:20 p.m., giving it a market capitalisation of just 1.6 million pounds.

Many retailers are struggling. Consumers have been feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, and as they worry about a stagnant housing market, job security, a fragile economic recovery and the euro zone debt crisis.

Blacks Leisure, which sells walking boots, camping equipment and ski jackets from 306 Blacks Outdoor and Millets stores employing 3,500 staff, said it had met a number of potential new investors.

Blacks' largest shareholder is Sports Direct, Britain's biggest sportswear retailer, controlled by Newcastle United soccer club owner Mike Ashley.

In a disclosure to the London Stock Exchange later on Wednesday, Sports Direct said it had lifted its stake in Blacks Leisure to 22.48 percent from 21.3 percent.

Ashley has considered bidding for Blacks, and a report in the Financial Times said he has proposed a joint venture with the firm as an alternative to supporting an equity raising.

Sports Direct declined to comment.

The problem with Blacks has always been that ... the Millets chain is a millstone around its neck, said independent retail analyst Nick Bubb.

All eyes will now turn to see what Sports Direct will do, but its strategy will probably be to pick up what it wants from the receiver in January.

Discounting is rife on high streets. Video games retailer Game and fashion retailer French Connection issued profit warnings last month.

Blacks came close to collapse in 2009, but survived after a rescue deal with creditors that saw it close some 100 stores.

(Reporting by James Davey, additional reporting by Anirban Sen and Matt Scuffham; editing by Gopakumar Warrier, Mark Potter and David Hulmes)