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Difficult times lie ahead for our industry, allthough our figures for January were slightly ahead of last year, February was very disappointing and if

March continues like this week then we will also face difficulties in meeting our commitments (rents rates wages loans) etc

I might be being a little pessimistic but I hope its not as bad for the rest of you.

Jessops Says Compact Camera Sales Drop; Shares Plunge (Update1)

By Hugo Miller and Angharad Couch

Feb. 28 (Bloomberg) -- Jessops Plc, the U.K.'s biggest specialist photography retailer, forecast full-year profit will plunge as demand for compact digital cameras wanes. The company's shares lost almost a third of their value.

Pretax profit for the year ending Sept. 30 will drop to about 6.5 million pounds ($12.7 million) from the previous year's 17 million pounds, the Leicester, England-based company said today in a statement.

The retailer said it plans to cut prices to win back customers after sales at stores open at least a year fell 3.4 percent in the past seven weeks. In January, Jessops reported its steepest sales decline in more than two years amid Christmas shortages of bigger, more expensive single-lens reflex digital cameras and competition from larger general retailers.

``Jessops may be a lead indicator of problems elsewhere in big-ticket consumer spending,'' said Nick Bubb, an analyst at Pali International Ltd. in London. ``The profit warning that Jessops came out with this time two years ago did mark the beginning of a sector-wide downturn in 2005.''

The stock plummeted 31.75 pence, or 30 percent, to 74.75 pence in London, the steepest drop since March 21, 2005, when Jessops said profit would miss estimates amid then-slowing consumer expenditure.

The stock rebounded in 2006, gaining 61 percent and outpacing the 17 percent climb by the FTSE All-Share General Retailers Index.

Bank Loans

Jessops said it's renegotiating the terms of its bank loans with HSBC Holdings Plc. The company plans to cut costs, develop its online digital printing business and a new range of consumer electronics, according to the statement.

Full-year gross margin, or profit as a percentage of sales, will be about 2.4 percentage points below last year's level, the company said.

Sales for the U.K. digital compact camera market as a whole fell 11 percent in January, while sales of SLR models rose 14 percent, lagging behind the ``30 percent-plus monthly sales increases typically seen during 2006,'' Jessops said.

Japan's Canon Inc. last month forecast its slowest earnings growth in eight years as competition erodes margins in digital cameras. Single-lens reflex cameras, which use larger, removable optical lenses and are popular with professional photographers, have become the most profitable part of the digital camera market as prices for compact models fall.

Jessops spent 5 million pounds to add self-service digital processing machines to 200 stores last year, seeking to differentiate itself from retailers such as Home Retail Group Plc's Argos.

To contact the reporters on this story: Hugo Miller in Geneva on hugomiller@bloomberg.net or Angharad Couch in London at acouch2@bloomberg.net

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Have just read the regulatory announcement on the LSE website about Jessops.

This looks very serious news. Although I am quite happy to see one of my competitors in trouble, this looks like the end of one of our industries big names. The massive drop in share price will make this company uninvestable for ordinary share holders.

The ariticle makes very interesting reading, but also frightening news for independant camera retailers.


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Nice to see you on the ball Trevor!!

Interesting that the chief exec predicts that they will be in debit £52 million to the bank. I think that means, thats what they owe to the bank. If that is the case then they are only a few million away from what the whole chain is worth. PS if you invested £1000 in jessops before xmas your money is now only worth £98.00

As we are swandwiched between two jessop stores I will be watching very closely.


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Very interesting to read the Jessops thread on the London Stock Exchange site. Obviously some inside info and shows a very dis-jointed organisation. Posts in the last few days show almost a frenzy among observers.

There are lots of major suppliers who will be holding their breath not least Fuji who have a huge exposure. I'm sure they'll be lining up suitors for some of the smaller sites more suitable for standalone labs. Possibly they may even start their own chains like they've done overseas?

Overall not a good look for our industry though and any collapse could show us all in a difficult light with Landlords, Banks and Financiers. Hopefully it won' get to that but by all accounts it looks dire.

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Have been doing sums this morning. total issued capital shares 103 million values company at £ 15.5 million (current share price 15p) prodicted debit to the bank £52,000,000.00 = per branch (313)

-£166,134.00 Barclays appear to own over 20% of total shares issued (14% purchased just before xmas HAHAHAHAHAHA!) Estimated loss for year end £8.5million pounds = per branch £27,156.00

Although i seam to be gloating, I do not wish to see this company collapse, as this could reflected badly on the industry. However as part of the industry this company has chased down the sell it cheap route to try and compete with non photographic retailers. Doing 50 prints for a fiver hasn't done them any good, has it?

Many of us out there are still selling our products and services at 1992 prices!! Both this company and Boots are in a commanding position to readjust the value of photographic goods and services. If both these companies have to disappear so the industry can get back on its feet so be it.


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There is more on this at the BBC web site http://news.bbc.co.uk/1/hi/business/6503633.stm

Jessops hammered by new warning

Shares in Jessops plunged almost 70% after the photographic retailer issued its second profits warning in a month.

The company warned that a 16.3% drop in the price of digital cameras and a 21.7% fall in camcorder prices across the market had hit revenues.

A 5.2% drop in like-for-like sales for the four weeks since 28 February also prompted the group to forecast it would report a first-half loss of £8.5m.

As it issued the warning Jessops also said two executives would be leaving.

Non-executive chairman Gavin Simmons will step down from the company after its results in May, while commercial director Robin Whitbread has resigned from the board.

Sales squeeze

"Jessops is experiencing unusually tough trading conditions, driven by severe price deflation in the camera market leading to pressure on both revenues and margins," chief executive Chris Langley said.

Mr Langley also warned that the group now expected to post a full-year loss of £5m, as it expected second-half profits to come in at £3.5m.

He added that in an effort to address the group's current problems he had launched a strategic review of the business, the results of which would be given to shareholders in due course.

While unit sales have held up, Jessops has been hit by the falling price of cameras which has cut profit margins.

Over the past four weeks, the company has in fact managed to gain market share. However, like-for-like sales - which strip out new stores - have fallen and first half gross margins are expected to be around 4% lower than at the same time last year.

The latest alert comes just four weeks after the group first warned that deteriorating conditions in the market would hit its earnings for the year.

Jessops shares sank 67.7% or 31.5 pence, to end at 15p on the London market.

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Hmmmm It's an interesting thought.

If the share price was pegged to the price of a 6x4 print then we might see some profit coming back!!

Serously, as an amateur investor in the stock market then (if I had Jessops shares) I'd be asking two questions.

1. Net Profit Which way is the trend going? Answer of course is that it's been going down for some time now.

2. If I don't like the answer to (1) then what can the company do to reverse this trend?

I cannot provide an answer to question 2 therefore I would sell the shares at whatever I could get for them. Which is what a lot of shareholders did yesterday.

As to the speed and depth of the reaction, reemember that many institutional investors actually believe what there advisors tell them, especially if they are in the "club". If you look at the reasons given for the fall in profits then you will see that the chief excuse is camera price deflation. i.e. customers only now need to spend £100 to buy that which used to cost £200, £300 etc. Now, how many readers of this board didn't see that one coming?

The fact is that Jessops have been taking over lots of small camera stores in order to build upo a dominant position from which they could dictate to the suppliers. Just perhaps (and this is pure speculation) some of these suppliers don't actually welcome this dominance?

The photo industry as presently operating is it's own worst enemy. We have customers who would be happy to buy cameras at £250 and pay 20p for their prints. So what do we do, we sell the cameras at £100 and the prints at 5p.

Total madness, and the chickens are beginning to return to the roost.

The Jessops crash is a sad day for those who work at the stores and it's a shame that a well respected brand has ended up in this mess, but I have to say that it's no suprise.

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And out of all this there will only be one winner - HP. With staff madly signing all their customers up to Picture House Jessops are helping to build the world's biggest imaging database HP can use to market all their products - particularly SnapFish. Whatever happens in the next few days you can be certain Picture House will remain - more likely under SnapFish branding,

PS. Jessops journey in the past 12 months was clear for all of us in the industry so how come all the analysts, institutional investors and others 'in the knowledge' didn't see this coming??

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Well put Photosave. Apparently the stores have a budget to sign up 10 Picturehouse customers a day which shows how keen they are to channel business through the net. If all else fails at least they have that database and separate lab production facility. As mentioned before the Sharechat on the Stock Exchange site seems to be full of comments from Jessops staff and is a great insight to what's happening inside their organisation right now.

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Have been keeping an eye on the share chat about JSP and its starting to get a bit bitchy between shareholders as the banks are gaining more and more control. However thought you would like to know that the rumour is that on or about 13th June the OVERDUE figures for the winter months are to be reported :o. Strong suspicion that the numbers will be poor with store closures to be announced (80 being mentioned) ;).

Our town has 2 jessops stores, one in the centre and one in a retail park. The town centre store has been there for over 30 years, the retail park store less than 3 years. With us in the middle either store going will be good news, as do get fed up with people quoating silly jessop prices for print work.

Wayne :D

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This are still not getting any better...

Sell on the first profit warning and buy on the third. So goes the old stock market adage. With Jessops shares decimated by three profit warnings this year, it was no surprise to see bargain hunters piling into the stock at the tail end of last week. But, before investors bet the ranch on the camera retailer, they should realise that there is a very real possibility they could lose all their money.

In Jessops' last alert, at the end of last month, the group told the market that it is likely to dive £8.5m into the red in the first half. This compares with the profit of £6.8m it had predicted only a month earlier. The fact that it was forecast to make a profit of £17.5m as recently as January illustrates the scale of the collapse at the company.

Equally worrying is Jessops' debt situation. The board expects net borrowings to hit £52m this year. This will take the company beyond its existing banking facilities so there is a real danger of the group defaulting and then going into administration. So far it has been supported by its bankers, HSBC, but this could easily change.

The camera retailer has little asset backing and this will make its recovery all the more difficult. Despite its 300 stores across the country, it has just £6m worth of freehold property and rents the vast majority of its outlets at a cost of £15m a year. It also has an £8.3m pension fund deficit.

Meanwhile, the collapse in sales it is suffering is very unlikely to abate any time soon. A plunge in demand for digital cameras - the market for the product was down 16 per cent in February on the previous year - means like-for-like sales at the retailer dropped 5.2 per cent in the four weeks to the end of March with margins 4 percentage points down on the first half.

Richard Ratner, veteran retail analyst at Seymour Pierce, says there is now virtually no visibility of earnings at Jessops. In his words: "The business could just as easily lose £10m this year as break-even."

This makes Jessops an ultra-high-risk gamble for investors. Last week's 22p close for its shares - valuing the company at just over £20m - compares with a share price of 150p at the start of the year.

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