Companies: JSP   

Like-for-like sales at specialist photographic retailer Jessops improved 9.4% over the five weeks to 1 January, with like-for-like sales from its website zooming up an astounding 74.3%.

Growth this year, even surpassing strong comparables from 2004, was driven by increased digital camera sales and Jessops’ gains seem to have arisen because of its early focus on digital photography, resulting in its strong links with manufacturers and a credible high street reputation. In order to compensate for difficult market conditions in 2005 Jessops established exclusive deals on some camera models, of which 16 were run over the festive period. These proved to be very successful, leading to the strategy being continued into 2006.

Jessops’ other price-led promotions over the Christmas period meant in-store products were competitive even with internet rivals and, although obviously lower-margin than normal pricing structures, are expected to stimulate increased return custom, particularly for photo development, which has much higher margins than hardware sales.

February was the period last year when sales collapsed and it’s possible that, post Christmas gift-giving, the latent demand for hardware has been soaked up. But, well behind that of analogue cameras, the current 50% household penetration of digital cameras still offers plenty of opportunity and Jessops has one of the leading processing offerings.

Results for the year to September 2005, released in November, showed pre-tax profits up 354% on the previous year to £5.9m on sales up 2.6%. For the full year 2006, brokers forecast £16.5m profits and earnings per share of 11p. The forecast p/e of 9.4 is not demanding. Buy.