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Retailing veteran David Adams took over as chairman of Jessops in May 2007, and he has quickly made his mark. In what might be the last go at turning around a perennial poor performer, 81 Jessops stores were closed by October 2007, and all the remaining 231 are now said to be profitable. There has also been a one-fifth cut in overheads and a £16.8m stock clearance programme.
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Such actions don’t come cheap however. The latest loss includes £60.5m of non-recurring costs, including £14.1m for loss on disposal of stock, £9.5m for store closures and £30.3m for goodwill impairment. The loss before financing fees was the forecast £7.5m, compared to a restated profit of £13.2m.
As well as cutting costs, Mr Adams has also been re-developing aspects of the business. Jessops has closed all its non-photographic websites, and has developed new internet portals including Picture House – a photo sharing and developing site.
Digital and film printing may only have accounted for £25.4m of the latest half-year revenues (cameras led the way with sales of £163.6m), but it earns the best margins and provides a high percentage of summer income. Mr Adams has also overhauled the supply chain and cut the range of cameras sold. HSBC is backing the company with a £66.5m facility, but the first and big hurdle is Christmas trading and there should be an announcement about that later this month.
JESSOPS (JSP) |
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|---|---|---|---|---|
| ORD PRICE: | 7.8p | MARKET VALUE: | £ 8.0m | |
| TOUCH: | 7-8.25p | 12-MONTH HIGH: | 153p | LOW: 7.6p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 31.5p | NET DEBT: | 148% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 350 | 13.1 | 8.3 | 2.25 |
| 2007 | 325 | -69.7 | -61.7 | nil |
| % change | -7 | - | - | -100 |
Mr Adams has made a good fist of turning Jessops around but until there's more evidence of the recovery, the shares are high enough.
Last IC Recommendation: Fairly priced, 10.25p, 27 Sep 2007
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
