Companies: JSP   

Jessops, the camera and photographic goods retailer, had a torrid time in the second quarter, causing first half losses to widen. The company raised £100 million on flotation last November, using this primarily to pay down its debt, reducing it from £126m to £42.8m. At the interim stage to March, turnover improved 4.5% to £161m but pre-tax losses grew from £256,000 to £2.6m. The second half accounts for the bulk of Jessops profits. Total like-for-like sales for the period were up 1.7% but trading in February and March declined rapidly. The company points to data from GfK Marketing, which claims the UK digital camera market grew by 36%, 32% and 20% in November, December and January, compared to the prior year but increased growth by only 0.1% in February. So far in the second half like-for-like sales are down 2.4%. Jessops operates 276 stores in total, having opened 18 stores in the last six months. Digital cameras make up 45% of the company's turnover but it is coming under pressure from online retailers. Still, there is plenty of scope for growth, as household penetration of digital cameras is only 35% compared to 83% for analogue cameras. Broker Seymour Pierce expects pre-tax and pre-execeptional profits will reach £15m this year (down from £17.5m last year). While the EPS of 9.7p serves up a reasonable prospective p/e of 9.1, we believe there are better shares out there. Avoid.