Jessops shares crash on slump in digital camera sales
Jessops shares crash on slump in digital camera sales
By James Moore
Published: 01 March 2007
Independent, UK
Jessops admitted yesterday it would have to sell off a huge amount of digital cameras on the cheap.
The company said it was making the move to shift excess stock as sales tumbled in January, causing shares in the company to crash by 31.75p to 74.75p. It also warned that pre-tax profits for the year ending 30 September are expected to tumble to £6.5m from £17m.
Sales of compact cameras in January fell 10.8 per cent, memory cards were 14 per cent lower and sales of camcorders fell 16.8 per cent.
The specialist retailer recorded a 14 per cent increase in sales of top-range digital SLR cameras but that compares with 30 per cent-plus monthly sales increases typically seen during 2006. However, in what will be seen as good news for consumers, Jessops said: “The board has decided it is in the interests of the business to drive sales volumes by lowering its margin targets.” That means the price of its main offerings will be slashed.
The retailer first warned of weak sales of the cameras in the summer, blaming consumer reluctance to check in expensive gadgets at airports in the midst of restrictions on hand luggage due to the alleged Heathrow terror plot.
It then admitted that December had been difficult but blamed manufacturers for supply snarl-ups.
Jessops said it had seen “modest” gains in market share in January but this was not enough to offset what it called “overall market softness”. Overall like-for-like sales during the past seven weeks fell by 3.4 per cent.
Ominously, the company warned it was renegotiating its banking facilities to “reflect these revised expectations” but maintained it had the “continuing support” of its main banker HSBC.
Jessops’ chief executive Chris Langley said: “We had previously indicated that we expected the digital compact camera market to peak in 2007 and confirmed in January that the digital compact camera market had continued to be soft over Christmas. What has surprised us… is the speed with which this market appears to have deteriorated.”
The company said it would make efforts to cut costs and push new products to try to make up for the lost revenues.
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