Sports Direct sees revenue rise as it looks to exciting year ahead

City Editor

Thursday 20 October 2011

SPORTS Direct, the retailer that has built an alliance with Ayrshire tycoon Sir Tom Hunter, appears to be defying the gloom enveloping much of the high street, as it continued to post rising revenues.

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TIM SHARP

The company, controlled by Newcastle United soccer club owner Mike Ashley, said total sales rose 11.5% for the nine weeks to September 25 to £329 million. Gross profit was up 12% to £131m.

Sports Direct does not publish like-for-like sales figures.

Chief Executive Dave Forsey said: “The group has delivered strong growth through the second quarter. The strong trading highlights the positive sales growth achieved post the tough FIFA World Cup comparisons.” He said the company has continued to “invest in margin”, industry speak for cutting prices and “on marketing” in a statement on Wednesday. Sports Direct, which owns Sports World and Lillywhites stores as well as brands including Slazenger, Lonsdale and Dunlop, said sales from its retail division rose 12.1%.This does not include a contribution from the premium lifestyle division formed after Sports Direct bought an 80% stake in Sir Tom’s USC and Cruise fashion chains in July.Sir Tom owns 0.7% of Sports Direct having spent £1m on its shares in August.Mr Forsey indicated that the company has high hopes that next year’s big sporting events will boost sales.“We remain positive about the group’s outlook and are excited about the opportunities in 2012,” he said highlighting the Euro 2012 football championships and the London Olympics later that summer.Sports Direct said it is on track to meet its 2011-12 target for underlying earnings before tax, interest, depreciation and amortisation (EBITDA) of £215m before staff bonus scheme costs. It made underlying EBITDA of £200.4m in 2010-11, inclusive of bonus costs. Sports Direct’s 2200 permanent staff will receive a share bonus averaging £44,000 after the retailer, hit its profit targets for the second year in a row.Some 3000 workers are eligible for a 34 million share payout for 2011 and the next three years but targets for all four years have to be met.Mr Forsey said he believed that the scheme is underpinning the company’s performance.Charles Stanley analyst Peter Smedley said: “This marks Sports Direct out as one of the retail sector winners. “We are convinced that this outperformance will grow as we enter 2012.”Sports Direct’s shares fell 8.1p or 3.4% to 229.6p.

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Sports Direct sees revenue rise as it looks to exciting year ahead

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