Leap from a small starting block

Hay & Robertson is a small sports firm being revitalised by a new management team. Figures later this month should show that the group has already been turned around from losses to profits. But the share price, at 109p to capitalise the group at pounds 22m, suggests an exciting ride.

The company has created the building blocks for what could become a substantial branded sports leisure-goods business. But the shares are speculative, and vulnerable to a bout of profit-taking. In September last year, only the preference shares had a stock market quotation. Lance Yates, a businessman who, in the 1980s, sold a character merchandising business to then-quoted Prestwich, took a stake at 10p a share. He moved in as chief executive, and gained backing from trusts linked to investor Paul Levinson, mastermind behind Prestwich's rapid growth.

Prestwich eventually lost its quote in a management buyout. Now, Yates owns 13 per cent and the Levinson trusts around 28 per cent of a group which has to date raised more than pounds 4m via fund-raisings at 10p and 47p. The second fund-raising, last March, brought in heavyweight institutions such as Flemings, Ivory & Sime, and Schroders, as major shareholders, adding credibility to the tiny enterprise. The new management team, which includes other significant shareholders besides Yates, has moved with speed to rebuild H&R.

Before the team's arrival, the company had been a clean shell with a small evening- wear business turning over pounds 600,000 and losing money. As well as injecting cash and management, the team has revitalised the evening-wear business, signing up Jeff Banks as a designer. But the real action has been the acquisition of rights to design and market branded sports and leisure- wear, including names like Kangol and Cotton Oxford. A deal with the owners of the Dunlop Slazenger range of sports equipment has ensured the exclusive right in the UK to design and sell sports and leisure clothing bearing Dunlop trademarks. The group is also building a distribution network.

In the UK, it will be selling through independent retailers and outlets such as Debenhams, River Island, Littlewoods, J D Sports, Olympus, and Blacks Leisure. Distributors have also been appointed in Europe.

Taking advantage of the soccer boom, H&R has also completed deals with Premier League and European clubs, such as Manchester United, Juventus and Glasgow Rangers, to sell replica kit in the form of sleepwear and underwear. It hasbought, too, the rights to Admiral, an established but neglected supplier of kit, replicas and leisure-wear. The deal includes an option, exerciseable after July 1997, to buy for ever the rights to the Admiral brand in Europe for pounds 1m .

To give the Admiral brand a higher profile, H&R is planning a range with a label denoting Ruud Gullitt, the charismatic Dutch football star and manager of Chelsea. The group will also devote energy to ranges based on its existing strong brands.

Stockbrokers Wise Speke forecast sales of pounds 8m for the 12 months to 30 September 1996 followed by pounds 12m with profits of pounds 0.5m and pounds 1.3m respectively. That compares with a 1995 loss of pounds 0.7m. Many of the recently announced initiatives will nothave an impact much before the summer and 1998 financial year.

Stockbrokers may come up with exciting numbers for 1997-98 sales and profits and so give a further boost to shares. Shares up to 200p may look fanciful in the short-run, but not impossible on a 12-18 month view. Buy.