Sports chain looks unbeatable

Blacks Leisure, a retailer of sports goods, is emerging as one of the most spectacular turnaround stories in the stock market. The shares have more than quadrupled since the start of the year as investors have realised that profits are entering a phase of promising growth. Even now, however, the full scale of the improvement is not fully reflected in the price and the shares could well double again in the next 18 months.

The latest charge in the stock follows the company's annual meeting at which it reported that like-for-like sales across the board were up 24 per cent over last year. Impressed by these figures, the firm's stockbroker has upgraded its profit forecast for the full year from pounds 5.4m to pounds 7m. That would put earnings per share at 14.7p, which means that one of Britain's fastest- growing retailers stands on a prospective price/earnings ratio of just 12.7 times. By contrast Marks and Spencer is on a prospective p/e of 18.5 and rival sports goods chain JJB Sports is on 20.5.

As recently as last year Blacks Leisure seemed to be struggling, with sales of pounds 65.6m producing profits of pounds 620,000. The operating profit margin was 1 per cent and return on capital 5 per cent, although even that was an improvement on two years previously, when the group had been making losses. Three principal forces have been at work in laying the groundwork for the recovery. First Simon Bentley, the chairman and chief executive, disposed of underperforming businesses including Quasar, a disastrous football brand.

Second, there was a programme of investment in all the behind-the-scenes aspects that make a retailer successful. This included improving the warehouse and distribution network, installing electronic point of sale (Epos) equipment and stepping up staff training to improve service levels, product knowledge and sales skills.

The third factor has been the buoyancy of the sportswear market, helped by events such as the Olympics and the European football championship. Unlike the struggling Olympus chain Blacks Leisure is especially focused on the sports clothing market, although it does sell some equipment. It is also totally brand oriented. Unlike Olympus it does not have an own- label brand nor does it plan to introduce one. Mr Bentley believes there is a huge market for sportswear worn as leisure clothing but says people want the reassurance, excitement and cachet of brands supported by huge promotional budgets.

Blacks Leisure operates three retail formats of which the most important is First Sport. Some idea of the growth momentum here is provided by like- for-like sales up 26 per cent so far this year. Seven outlets have also been opened since March against three last year, taking the total to 51. These are typically in prime high-street locations or shopping centres and sell footwear, clothing and equipment from manufacturers such as Nike, Reebok and Adidas. This is what Bentley calls street fashion for those between 12 and 18 buying trainers, shorts, jogging bottoms and T-shirts.

A new format launched last year is ActiveVenture, which sells sporty but fashionable outdoor wear like Timberland, Burberry and Rockport. Decor includes boats suspended from the ceiling and even, in one shop, an old pair of cathedral doors. Landlords at shopping centres such as Lakeside in Thurrock, Essex, welcome the group with open arms. In a year, the number of outlets has grown from one to nine.

The longest established of the retail chains, Blacks Leisure, which sells camping gear and ski equipment, is not in such a heady growth phase. Two large outlets in London and Manchester are being refurbished, with more change planned for the rest of the 37-strong chain.

Profit forecasts by analysts of pounds 7m for the year to end February 1997 compare with the pounds 2.1m made last year - evidence enough of the remarkable progress the group is making. Beyond that, however, there is scope for much more to come.

Mr Bentley reckons he can add 30 outlets a year to the 92 in May. Throw in like-for-like growth even at a more modest pace and profits should move ahead at a healthy rate. The shares look an outstanding buy.

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
PROMOTED VIDEO
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Life and Style
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Web developer (C#, MVC4, HTML5, CSS3, Javascript, Jquery)

£30000 - £44000 per annum + Bonus+Benefits+Package: Harrington Starr: Web deve...

Senior Automation QA Engineer (Java, Selenium WebDriver, Agile)

£40000 - £65000 per annum + benefits+bonus+package: Harrington Starr: Senior A...

Web developer (C#.NET, ASP.NET, MVC3/4, HTML5, CSS3, JAVASCRIPT

£35000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Web deve...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment