News Column

Sports Direct Full-Year Revenue, Pretax Profit Boosted By Sports Retail Division

July 17, 2014

Rowena Harris-Doughty



LONDON (Alliance News) - Sports Direct International PLC Thursday said full-year revenues and pretax profit rose, boosted by strong growth in its Sports Retail division, as it continues to trade in line with management expectations.


Sports Direct, the UK's biggest sporting goods retailer by revenue said group revenue rose 24% to GBP2.71 billion from GBP2.19 billion last year. Revenue metrics were significantly boosted by growth in the Sports Retail division, with revenues up 24% to GBP2.27 billion from GBP1.83 billion last year.


Revenues from the Premium Lifestyle division also recorded growth, up 49% on last year, to GBP214 million from GBP143 million. Sport Direct's Brands revenue rose to GBP218 million from GBP209 million in 2013, a 4% rise.


Sports Retail metrics include the results of the UK and International retail network of sports stores along with related websites; Premium Lifestyle revenue includes the results of the premium retail businesses such as Republic, Cruise and USC and the Brands division includes results from the group's portfolio of international brands such as Everlast, Lonsdale and Dunlop.


Pretax profit for the year rose 16% to GBP239.5 million from GBP207.2 million in 2013.


Profit and sales continue to be driven by strong retail growth both in its stores and online, said the retailer, which added that its strategy of offering a wide range of value for money quality products underpinned its outperformance for the period.


Online revenues were up 26.8% during the year, said Sports Direct. Online retail now represents 17.1% of all Sports Retail sales, compared to 15.0% as recorded in its full-year results in 2013.


Sports Direct said that it will not be proposing a dividend for the full-year. The company said that, consistent with recent practice, the board remains of the opinion that is in the best interests of the group and its shareholders to "preserve financial flexibility, facilitating the pursuit of potential acquisition and other growth opportunities."


The payment of dividends remains under review in future years, said the company.


The FTSE 100-listed retailer said Thursday that it has outperformed its third underlying EBITDA target of GBP260 million set under the 2011 employee bonus share scheme. This means that the group has successfully met the first three targets. Sports Direct said that it is "very confident" of achieving the final target of GBP300 million under the scheme.


"Overall trading since the year end has been in line with management's expectations with some stronger weeks offset by England's disappointing World Cup matches. Consistent with previous guidance, we continue to target underlying EBITDA (before share scheme costs) of GBP360 million for the current period," said Chief Executive Dave Forsey.


It also said it retained the ability to invest in margin, inventory and group marketing to deliver long-term sustainable growth.


The company said Sports Retail like-for-like stores gross contribution was up 10.5%, compared to the 10.6% recorded in 2013.


The company said overall trading since the year-end has been in line with management expectations, and that some stronger weeks offset by England's disappointing World Cup matches.


Sports Direct said that its performance continues to benefit from a number of factors including the historic investment in gross margin, investment in product range and availability, increased operating efficiencies and the continued optimisation of its in-store and web product offering.


Sports Direct operates in 19 countries in Europe, including Belgium, Austria, Slovenia, Portugal and France. The retailer accelerated its European expansion during the period with recent acquisitions, keeping its strategy for international expansion "on course." The company has recently acquired Eybl and Sports Experts AG in Austria, and Sportland International Group in the Baltic region.


It has also recently signed a new GBP688 million committed, unsecured revolving credit facility which will remain in place until September 2018, which will provide "a strong foundation on which to deliver our growth plans over the next four years," said Non-Executive Chairman Keith Hellawell.


Sports Direct said that during the year it has continued its investment in inventory and strategic acquisitions whilst focusing on maintaining a strong balance sheet


Earlier this week, the sports retailer said it has partnered with its new investment online retailer MySale Group PLC, to launch a Sports Direct offering in Australia and New Zealand later this year.


Sports Direct said it plans to launch in Australia and New Zealand by forming an online partnership with OzSale.com.au, part of the MySale Group, giving Sports Direct immediate access to its 12 million customers. The sports retailer bought a 4.8% stake in newly-listed MySale last month.


It was the third big strategic investment the sports retailer has made in other UK retailers this year, after buying up stakes in department store chains Debenhams PLC and House of Fraser earlier in the year.


As part of its investment in Debenhams, last month Debenhams said it will be launching Sports Direct trial concessions to optimise space in its UK stores, and boost its sports product offering.


Earlier this month the retailer's shareholders finally voted in favour of its 2015 Bonus Plan for executives, meaning that founder and Deputy Chairman Mike Ashley would potentially get his first share bonus since the company listed in 2007.


However, Sports Direct said Wednesday that Ashley has now withdrawn from the company's 2015 Bonus Share Scheme, and he also informed the board that he does not expect any other share-based incentive scheme to be proposed to shareholders in relation to his role as an executive director of Sports Direct.


The revised and approved share scheme will grant those included in the plan, including "eligible employees", no-cost options over 25 million shares, as long as certain earnings before interest, tax, depreciation and amortisation performance targets are met.


With Ashley's withdrawal from the scheme, it mean the "eligible employees" - around 3,000 full-time employees - will get a bigger share of the 25 million share handout if all the retailer's performance targets are met.


Ashley holds 57.71% of Sports Direct shares, after selling a 4% interest in the company for GBP204 million in April. The company's shareholders have previously voted against paying Ashley any pay or bonus on three separate occasions, most recently in early April when they rejected a GBP72.5 million share bonus package.


While shareholders approved the plan at the company's general meeting at the beginning of the month, just under 40% of shareholders still voted against the latest proposal.


Shares in Sports Direct were trading 0.70% higher at 718.50 pence per share Thursday morning, one of the biggest gainers in the FTSE 100.








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Source: Alliance News


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