The Investment Column: John David Sports

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The Independent Online
SPORTS RETAILERS have enjoyed an energetic recovery this year and John David Sports has been a clear winner. The shares have more than trebled this year as JD has recovered from its self-inflicted problems of 1998, when it stocked too many lines and was forced to cut prices to clear the shelves.

Those problems have been addressed and the signs of recuperation were visible in yesterday's half-year figures. Profits were up by 13 per cent to pounds 6.7m while like-for-like sales rose by 3.8 per cent. Heavier promotional spending sent same-store sales more than 5 per cent higher.

JD operates at the fashion end of the sports market, concentrating on the clothing and footwear that sports enthusiasts wear on the terraces rather than the kit they wear on the pitch. It's a riskier area because fashions can change quickly. But it also means that JD is not competing head on with sportswear leader JJB Sports, which stocks more mainstream gear.

Meanwhile, the sector's capacity problem is being addressed. JD will open around 10 stores this year, bringing the total to around 140. JJB is opening more out-of-town stores but many of these will devote a lot of space to entertainment areas selling basketball hoops and football nets.

Sector consolidation should take further pressure off the capacity issue. Still, much rides on the likes of Nike, Adidas and Reebok continuing their lavish promotional spending.

On Peel Hunt's full-year forecast of pounds 10.8m, the shares trade on a forward multiple of 10. That seems good value, though JJB, which commands a slight premium to JD, might be a less risky bet in the sector now shrugging off the high street's woes.