The trick is to meet past form reproduci

The Investment Column

There can be few doubts about the strength of the recent performance of Oasis, the chain of women's fashion stores to be floated on the stock market next week. Since Michael and Maurice Bennett bought the chain back from the receivers in 1991, the company has expanded store numbers from 17 to 70 and last year posted pre-tax profits of pounds 9.5m on sales of pounds 50m.

It is the Bennetts' third successful venture after selling a camera business to Dixons and building up the Warehouse fashion chain with Jeff Banks, the former Clothes Show presenter.

Like-for-like sales in the first three months of the year were up by 10 per cent. This would be impressive even in boom times, but to pull it off on a sluggish high street dogged by the "feel-bad" factor deserves plaudits.

Oasis's strength is fashion for 18-35-year-olds backed by a flexible system that enables it to order stock much later than many larger retailers. The plan is to add about 50 stores in the UK while expanding the overseas interests with stand-alone stores and concessions in department stores. Menswear and childrenswear are also under consideration.

But is it a good investment? One problem is that a formula that works in 70 stores might become stretched if extended to over 120 or more. However, a new warehouse that comes on stream in the autumn will help.

Another concern is that Oasis is very much the Bennetts' show and both are over 60. Fresh blood may be needed in the second tier of management. There is the threat of legal action from the company's founders, though institutional investors have been made aware of the problem and expressed no concern. The company denies the claims and says it has no legal libility.

Oasis is clearly on a roll. Its difficulty is to keep reproducing its past form in the notoriously high-risk fashion sector. The placing of 16 million shares has been priced at 148p, which values the company at pounds 77.6m. That gives the shares a historic rating of under 13, a significant discount to the sector average of 15, but the prospects look unexciting.

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