Profits plummet at Sports Direct

Pre-tax profits at Sport Direct dived 35.2% to £52 million for the 26 weeks to October 28, after the worst first-half trading in the company's history.

Group revenue slipped 7.1% to £668.1m for the period. Unseasonal weather and tough comparatives against the football World Cup in 2006 were blamed for a 12.9% drop in retail sales to £518.4m. EBITDA also dipped 16% to £83.6m.

However, gross margin was up 220 basis points to 43.3%, mainly driven by improvements to the UK retail gross margin.

Brand revenue also rose 7.1% to £88m, with wholesale revenue up 2.8% to £77.5m Licensing revenue was up 56.7% to £10.5m, driven by the acquisition of sports brand Everlast and a deal signed with Dubai-based partner Retail Corp, which plans to open Lillywhites and Sports Direct stores in the Middle East.

Chief executive David Forsey said the results reflected a very challenging UK market. He added: "They also demonstrate the resilience of our business under such pressures from external factors. We remain determined to adapt our strategy, consolidate our market- leading position and develop our strong brand portfolio to drive long-term growth."

The company said that the England football team's failure to qualify for Euro 2008 would hit EBITDA by about £50m next year.

But the group added that the impact would be cushioned by improving performances in the international retail and brands businesses.

Sports Direct said it would continue to open between 35 and 40 stores a year. It already has 478 stores.

Sports Direct founder and deputy chairman Mike Ashley told the City that he had no plans to take the company private for a "considerable time".