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.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
life
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
ebooks
ebooksA special investigation by Andy McSmith
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
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

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee