Jessops buoyed by surprise demand for digital cameras

Nine out of 10 cameras that Jessops sold over Christmas in cash terms was digital, the retailer revealed yesterday as it fell into the camp of festive winners.

Nine out of 10 cameras that Jessops sold over Christmas in cash terms was digital, the retailer revealed yesterday as it fell into the camp of festive winners.

Derek Hine, the chief executive, said he was "surprised" how quickly consumers are consigning traditional film cameras to photographic history.

A 26 per cent jump in sales of digital cameras over the five weeks to 2 January helped the newly floated company to report a 6.2 per cent rise in like-for-like sales. "It was a tough Christmas but we are pleased we fared better than most," Mr Hine said.

The digital photography boom hit the group's analogue developing and processing (D&P) profits stream, which is dwindling as more people opt to print photos at home.

Total D&P sales fell 4.1 per cent during the period, which the group said "inevitably had a short-term impact on gross margins". With the summer developing boom still to come, the company does not expect the blip to blight its full-year results.

It did admit the shortfall had affected revenues across its 271 UK stores, which reported like-for-like sales growth of 4.5 per cent. Unlike other retailers, Christmas is not disproportionately important for Jessops, with the quarter accounting for 25 per cent of group sales.

By way of compensation for the poor D&P figures, the company's fledgling direct sales business, which spans mail order and its internet site, grew twice as fast as the company had expected. Like-for-likes sales from its direct sales arm shot 46.2 per cent higher. Mr Hine said: "I was surprised by the number of customers that decided to stay at home and shop. The increase was dramatic."

He predicted the direct sales division could increase by a "couple of percentage points" but admitted it would always remain "small beer" compared with the rest of the business.

Jessops said underlying direct sales, which accounted for 5 per cent of total revenue last year, were up by 26.7 per cent for the 13 weeks to 2 January.

Its experience caps a strong year for the online retail sector, according to a study out yesterday that showed Britain outstripped its European counterparts when it came to shopping online. Nearly one in three Britons bought more than 16 items online in the past year, compared with 19 per cent of Europeans, research by Millward Brown for the European Interactive Advertising Association showed. More than a quarter of Britons spent more than £1,000 online during the past 12 months, beating a European average of 15 per cent.

While other retailers of digital products have struggled against deflation, Mr Hine said the average price of a camera had fallen only 5 per cent. That compared with a 20 per cent annual fall in the cost of a computer. Mr Hine said the introduction of digital single lens reflex cameras, which have changeable lenses, was boosting revenues because they retail at about £650.

Jessops floated its shares at an issue price of 155p on the stock market in October, four years after its attempts to seek a listing were stymied by a lack of institutional demand. Its shares slipped 5.5p yesterday to 158.25p.