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Blacks Leisure could be on the mend, with acting chief executive Keith Fleming stressing that a major theme across the group is "back to basics as we build the foundations to return the business to past levels of profitability". Indeed, the outdoor retailer benefited from increased in-store availability of camping ranges during the crucial summer selling period, while improved working capital management led to an impressive £7m reduction in stock held for sale. Meanwhile, like-for-like sales rose by a respectable 3 per cent, but this was helped by weak comparatives as sales during the first half of 2006 were held back by a heat wave, the football World Cup and the absence of a festival at Glastonbury. In the first seven weeks of the second half, underlying sales have risen by 1.5 per cent.
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Following a strategic review, the board has decided to retain the Freespirit boardwear chain, which does well in hot, dry weather and so provides a counterbalance to Blacks and Millets, which do well in colder, wetter weather. And the restructuring of the store portfolio remains on track with around half of the 45 Millets stores which are earmarked for closure expected to have been shut down by the end of November.
Broker Shore Capital forecasts adjusted pre-tax profits in 2008 of £6.4m and EPS of 10.4p (3p in 2007), rising to £10m and 16.2p, respectively, in 2009.
| BLACKS LEISURE (BSLA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 269p | MARKET VALUE: | £115m | |
| TOUCH: | 267-269p | 12-MONTH HIGH: | 466p | LOW: 246p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 212p* | NET DEBT: | 6% | |
| Half-year to 1 Sep | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 141 | 75 | 0.12 | 3.3 |
| 2007 | 147 | -648 | -1.04 | 2.0 |
| % change | +4 | - | - | -39 |
Ex-div:19 Dec Payment:30 Jan *Includes intangible assets of £37.2m, or 87p a share. |
||||
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Blacks trades on a hefty 17 times 2009 forward earnings, but with Sports Direct majority shareholder Mike Ashley holding 29 per cent of the stock, there's takeout potential. Fairly priced.
Last IC view: Fairly priced, 343p, 24 July 2007
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-IC-1.5.0d-prod - 07/10/2008 17:37:17 - FurseJ
