The Investment Column: Blacks boosts its performance

Blacks Leisure Group, the sports equipment and fashion retailer, has been something of a sporting success for investors. The shares have outperformed the sector by nearly 20 per cent in the past year, though at 442.5p, up 5.5p yesterday, they are still some way off the heady 549p reached in the early summer.

Yesterday's results for the six months to the end of August show that the company is still growing, albeit at a somewhat slower pace. Profit before tax increased by 36 per cent to pounds 5.3m, and the interim dividend jumped 40 per cent to 1.75p a share. Although analysts were impressed by progress, the figures were slightly below some expectations. A rise in "administration costs" to pounds 867,000 from pounds 429,000 in the same period last year caused some concern. Blacks said these were one-off costs associated with investment in marketing and the establishment of a long-term incentive scheme.

There was some speculation that the ActiveVenture format may not have been doing as well as expected. Blacks declined to reveal like-for-like sales in the division.

Blacks was not so reticent about First Sport, which delivered another strong performance, with like-for-like sales up 11 per cent, despite strong trading during the European Football Championships last year. Observers believe there is still demand for brands such as Nike and Reebok as fashion items. Blacks is making sure customers won't have to look far: at the end of August, the group had 126 stores, up from 98 the previous year. By the year end, 138 outlets should be open.

Societe Generale Strauss Turnbull is nudging up its forecast for the year to February 1998 to pounds 13.5m. That means Blacks is trading on a forward p/e ratio of 15. Compared to rivals such as JJB Sports, that looks attractive.

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