Sportswear retailer JJB Sports has said its estate of health and fitness clubs continued to grow revenues despite the current economic turmoil.
Like-for-like sales for the group were down 1.2% in the 12 weeks to July 20 - better than the 5.3% decline reported in May and helped by a 5.9% improvement at the clubs. Store sales were down 2%, compared with 6.5% previously.
The company said store fit-outs, management training and an incentive scheme for staff were helping the retail performance. It recently opened a new store in Corporation Street, Birmingham.
It added: "JJB's health clubs, with their strong value-for-money offering, have seen continued positive revenue and gross margins, and have only been slightly affected by the current economic situation."
JJB operates around 50 clubs, with new sites planned at Cardiff, Cambridge and Barrow-in-Furness in the next two months.
Panmure Gordon stockbrokers said it could see "clear evidence" of an improved retail performance, but still downgraded its profit forecasts to reflect the worst retail conditions in 17 years.
Analyst Philip Dorgan said: "The sales trend is improving and this is being driven by a better, more differentiated offer. It will take time for the profit opportunity to be delivered, but we believe that the foundations are being laid for strong growth."
He reduced his pre-tax profits forecast by 19% to £30 million for the year to January and by 11% to £39 million for the following year.
JJB's fortunes have been impacted by its exposure to the replica kit market and the failure of any of the home nations to qualify for Euro 2008.
The group has looked to offset its reliance on replica kits by increasing the proportion of "own brand products" in its stores, adding to existing examples such as Olympus, Patrick and Lotto.
As part of its business review, it has increased the frequency of deliveries to its stores, introduced the store staff incentive scheme and opened a training academy in Wigan.
Roger Lane-Smith, JJB chairman, said the company remained cautious about prospects for the remainder of 2008. He added: "I am confident that the executive board are taking the right decisions to build a strong foundation for the future of JJB and to get us through, what looks like being, a very challenging second half to the year."