The investment column: Blacks in the top league

LIKE all sports retailers Blacks Leisure has been affected by the shift in sentiment as fears have grown about over-supply and weakening demand. Blacks shares, which enjoyed meteoric growth in 1996 and early 1997, fell sharply in March as investors took fright. Yet demand is still predicted to grow albeit at a slower rate. The concerns relate more to the amount of new space being added by the major chains, particularly JJB Sports and Sports Division.

Blacks offered some reassurance yesterday with a 35 per cent increase in full-year profits to pounds 13.6m and a five per cent rise in like for like sales in current trading. That is a decent performance in a tough market. Blacks admits new space could be a problem but says it will be able to maintain growth as the market polarises among the larger players. It predicts the top five sports retailers' share of the market will increase from 30-50 per cent over the next few years.

Blacks$ strength is that is more broadly based than its main rivals. As well as First Sports, whose like for like sales are flat in current trading, it has Blacks Outdoor (up 21 per cent) and Active Venture (up 8 per cent). Even at First Sports , replica shirts account for just 5 per cent of sales (down from 7 per cent the previous year) compared to around 15 per cent at JJB. This is a benefit as demand for replica is flattening as more consumers buy them direct from club shops.

Blacks itself is cautious on store opening with 35 this year, 30 First Sport and the rest Blacks Leisure.

The World Cup should provide a boost and chief executive Simon Bentley is confident the sales will be incremental rather than simply dragging sales forward from the autumn.

On current forecasts of pounds 15.5m this year the shares, down 12.5p to 388.5p yesterday, trade on a meagre forward rating of 12. Beyond the World Cup the market will be tougher this year but Blacks is a well-managed company with a safer spread of interests. Hold.

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