The Investment Column: Blacks hums as sport booms

Investors with long memories will remember Blacks Leisure, the camping and sports clothes group, as a 1980s wonder stock that never quite made it. The group has been attempting to rehabilitate itself since the arrival in 1989 of Simon Bentley, now chairman and chief executive, although it is only in the last three years that things have started to hum.

Underlying profits have soared from pounds 210,000 in 1993-94 to pounds 2.84m last year and yesterday's interim results continued in the same vein. Pre-tax profits more than quintupled from pounds 736,000 to pounds 3.9m in the six months to August, putting another 5.5p onto a share price which has zoomed from 49.5p to 295.5p since the start of the year. Mr Bentley has been beavering away to improve the performance of Blacks, getting rid of non-performers like the footwear businesses and the Miss Sam womenswear wholesaler.

But it is the boom in the market for sportswear as a fashion item which is really fuelling Blacks' growth. Unlike Sears' ill-fated Olympus chain, the group is embracing the current passion to wear brand names like Nike, Reebock and Adidas with gusto. With a Nike annual advertising spend of something like $400m, it is perhaps hardly surprising that like-for-like sales in the group's First Sport chain have leapt 25 per cent in the first half. Fifteen new stores this year will take the total to 58 and Mr Bentley believes there is scope to more than double that figure in two to three years.

Blacks Outdoor, the original chain, continues to squeeze growth out the camping and outdoor clothes market, with like-for-like sales marching 22 per cent ahead in the six months. Meanwhile ActiveVenture, the move into more up-market outdoor wear, should chip in getting on for pounds 1m this year, despite only being launched in August 1995. With underlying sales 15 per cent ahead in the second half, profit forecasts have been raised to pounds 8.8m for the full year, putting the shares on a forward p/e of 17. With more good growth next year bringing that rating sharply lower they are still reasonable value, albeit with some risks. The increasing dependence on fashion leaves Blacks vulnerable to shifts in taste.