Legends surf shops

THE FOLLOWING IS AN ARTICLE FROM A YEAR AGO BUT CONTIANS SOME NICE HISTORY FOR THOS NEW TO LEGENDS

Legends Surf Shops joined OFEX back in July 1996, since when it's shares have risen from the 3.5p issuing level to a high this year of 16.5p, but have since fallen back to their current price of 6.5p. This capitalises the extreme sports retailer at £3.61m.

Finding a place to start the Legend story is tricky as it is difficult to identify when it was that the Leamington Spa based firm turned from being just a small business with big ideas, to a growing business putting big ideas in place. I guess then, the best place to start is at the beginning of its term on OFEX.

Legend Surf arrived on the market with the aim of retailing well known branded goods including clothing, accessories and hardware relating to extreme sports such as snowboarding, surfing and skateboarding. They stock labels including Quicksilver and Oakley amongst others that appeal to young people irrespective of whether that individual participates in the particular sport that he or she is buying goods for.

I'm sure I can't be the only one who's noticed how much Skateboards have come back in 'vogue', I can't walk anywhere without seeing a young person practising their tricks on the steps in the park, or come to think of it on anything that's solid (or maybe isn't!).

Legends doesn't concentrate its efforts solely on skateboarding, it's very much involved with all extreme sports but to capitalise on 'local trends', it has opened up regional specialists shops to 'cash in' on what each individual area is into. Examples of this can clearly be seen in their Brighton shop, where they have unique BMX flooring, whilst the Leamington branch contains the biggest selection of snowboard products available anywhere in the United Kingdom.

This year saw the launch of the Company's online shop, www.legendsboardriders.com, which hasn't yet been widely advertised, but the directors remain confident that it will contribute a significant proportion of turnover in future figures.

These interesting developments haven't gone totally unnoticed to the rest of the market as in April, Aim quoted Legendary Investments (LEG) bought 10million shares (equating to 18%) for £550,000. Legends are also a hot topic on Bulletin Boards often being picked out as one of the 'value' stocks on the OFEX market. The recently reported figures wouldn't disagree with those sentiments either, as with price earnings at 9.03 for the last reported year, and the last set of 6 month results to July 2000 showing a 27% increase from the corresponding period in 1999, things don't seem to be looking bad at all.

Legends currently have 20 shops trading and since 1996 have seen sales increase by an average of 85% a year, starting from £663,000 in 1996 to £4.2m last year. So not only does it get noticed by investment vehicles, but by newspapers as well. The Sunday Times listed it in the Fast Track 100 companies magazine at the beginning of this month and Shares Magazine have also suggested that a move to AIM is expected early next year.

During my research I have tried to find a similar Company to compare Legend to, probably the most appropriate comparison is Ron Jons (www.ronjons.com), quite possibly the most famous surf shop brand in the world. Ron Jons was established back in 1961 when it opened its first outlet in the Long Island Beach area of New Jersey, since when it has opened a further 4 branches. The most apt synergy between the two businesses is their aggressive expansion plans. At Legend it is undoubtedly the Stewarts who are the driving force behind the firm whilst at Ron Jons, recently appointed Edward Moriarty has provided the nationally known 'surfing institution' with a great new energy that he gained whilst working at Walt Disney for 21 years.

Looking back at the sale of shares to Legendary Investments Plc, I can't help but think that maybe the reason these shares were sold was to provide the Company with some sort of protection from a cheeky bid. The shares were sold by Christian and Adrian Stewart (Chairman and MD) and I suspect being aware that they would be become a target but also baring in mind they would require reinvestment before too long, the sale of stock to that particular Company and at that time probably seemed like a wise decision. If my suspicions were correct, what would have been of paramount importance would be selling to a Company that could provide additional funds and also one who was not just looking to make a quick turn. These two factors along with the fact 63% of the shares are owned by Directors show the universal faith the market has in this Company. Maybe not so universal to the shareholders who have sold it down from 16.5p earlier this year, but the big players in the market have certainly taken note of this OFEX fledgling.