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Debenhams dents Sports Direct profits

Pre-tax profits at Sports Direct fell 72.5% to £77.5m for the year to 29 April compared with 2016/17, after it took a £85.4m hit on its stake in Debenhams.

Sports Direct owns a 29.7% share in Debenhams and reported a loss of £98.1m in income in relation to the reduction in value of the department store chain.

By comparison, last year the sports retailer’s profits were buoyed by the sale of its shares in JD Sports and the disposal of the Dunlop brand.

However, sales and underlying profits at the retailer increased for the year. 

In 2017/18 Sports Direct sales were up by by 3.5% to £3.4bn, driven by strong growth outside Europe and the UK, as well as its premium lifestyle division.

UK sports retail revenue fell by 2% to £2.2bn, while European sports retail revenue fell by 0.1% to £637.2m, compared with the previous 53-week period. Rest-of-the-world sales leapt 594.6% to £192.4m.

The premium lifestyle retail division, which includes the Flannels chain, grew sales by 42.7% to £162.1m after the retailer opened more stores and grew its online sales.

Group underlying EBITDA, before share scheme costs, for the year was up 12.2% to £306.1m. Group underlying profit before tax increased 34.5% to £152.9m, due to the higher EBITDA, favourable realised FX and lower depreciation and amortisation charges. 

Chief executive Mike Ashley said: “Our underlying EBITDA has come in at the top end of our expected range at £306.1m, as we indicated this time last year. Underlying profit after tax has increased substantially to £104.9m.”

“As the property pipeline and brand relationships accelerate, we are confident in achieving between a 5% and 15% improvement in underlying EBITDA for the coming financial period,” added head of elevation Michael Murray.

 

 

 

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