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Sports Direct CFO brushes off fall in profits

Sports Direct chief financial officer Jon Kempster has said the retailer is “where it expects to be” financially, despite a fall in its pre-tax profit.

The company’s reported pre-tax profit dropped by 67% to £45.8m in the 26 weeks to 29 October. However, Kempster insisted that Sports Directs was “reasonably happy” with its trading performance, particularly in the run-up to Christmas.

He pointed out that underlying EBITDA was up 7% to £156m during the half year.

“Mike [Ashley, founder and CEO of Sports Direct] set an EBITDA range of between 5% and 15% back in July , and this [result] has landed squarely in the middle, so we’re reasonably happy,” he explained.

Group revenue rose by 4.7% to £1.7bn, but its UK sports retail revenue fell 1%. The retailer plans to open up to 20 UK stores in 2018, in locations including Leicester, Watford and Thurrock.

Kempster said Sports Direct – like all retailers – is hoping the impact of Brexit will be “minimal from a trading perspective”.

“What that will actually end up looking like will be interesting,” he said. “There will potentially be an impact on foreign exchange rates and buying and purchasing costs, because obviously there was after the vote.

“We’ve hedged out through to April 2019 on our major US dollar purchasing, but we’re wary to do too much at the moment depending on what will happen.”

He added that Sports Direct will not increase or decrease its number of wholesale accounts, and will “continue to invest” in its brands.

 

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