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Profits edge up at Sports Direct

Sports Direct

Sports Direct

Sports Direct

Sports Direct has announced a 3.6% increase in underlying profit before tax to £166.4m for its first half, as group sales remained flat at £1.4bn.

For the 26 weeks to October 25 group underlying EBITDA increased 7.6% to £218.5m at the sportswear retailer, while group gross margin was up 90 basis points.

Sales in the sports retail segment of the business edged up by 0.2% to £1.2bn, while sales in the company’s premium lifestyle division fell 12.2% to £88m. Sales in the branded section of the business increased 10% to £113m.

During the period, the retailer opened 15 new UK stores and continued to roll out its large format stores, launching in Leeds and Plymouth. It also opened combined gym and retail spaces in St Helens, Merseyside, and Newport. It also opened five new concessions in Debenhams.

Sports Direct also acquired the remaining 50% of Irish department store group Heatons during the half.

The group also extended its warehouse in Shirebrook, Derbyshire, by 700,000 sq ft.

Dave Forsey, chief executive of Sports Direct, said: “The group has delivered another excellent set of results, particularly given the strong comparable sales generated in the build-up to the Fifa 2014 World Cup and after a generally mixed summer for the retail sector.

“Trading since the period end has been in line with management’s expectations and, while we retain the ability to invest in margin, inventory and group marketing to deliver long-term sustainable growth, we remain confident of achieving the 2015 Share Scheme’s revised underlying EBITDA target of £420m.

He added: “We look forward to 2016 with confidence ahead of the Olympic Games in Rio de Janeiro and the 2016 European Football Championships in which England, Wales, Northern Ireland and the Republic of Ireland will be competing.”

Keith Hellawell, non-executive chairman of Sports Direct, said the group was “pleased with the improved performance”, particularly given the “disappointing summer weather”.

He also addressed the criticism Sports Direct receives over its use of zero-hours contracts.

Hellawell said: “Our casual workers are also an integral component of our workforce. To be clear, no warehouse workers are on ‘zero-hours’ contracts; all have contracted hours with the agencies. In retail, casual workers find the flexibility offered by these arrangements very useful. We comply fully with all applicable legal requirements and will continue to keep these under review.”

He also added that the “inconvenient” security process warehouse workers have to endure, which includes getting their bags checked at the end of each shift, had been “streamlined” to reduce waiting time.

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