Mike Ashley’s Sports Direct International has reported rising revenue and profits as the retail group reaps the rewards of acquisitions, a strong performance in its premium lifestyle division and the sale of its Shirebrook distribution centre.
Group revenue rose by 14% to £204.5m in the 26 weeks to 27 October following a 79.2% jump in sales from premium lifestyle and a 6.2% increase in UK sports retail sales.
Reported profit before tax soared by 160% to £193.4m.
However, if acquisitions are excluded, group revenue fell by 6.4% during the period.
The retailer downplayed the potential impact of a surprise £605m tax bill from Belgian authorities, arguing the tax issue will not result in liabilities.
Chief executive Ashley said that Sports Direct continues to work with the Belgian tax authority, which expects to conclude its review early next year. Sports Direct has employed PWC Belgium to independently review the same systems and VAT accounting that the Belgian tax authority is investigating.
Ashley added that “an awful lot of work” has been put into taking department store House of Fraser, which Sports Direct bought in August last year, from “an unmitigated disaster to a functioning state”.
He backpedalled against previous comments about the “terminal” nature of House of Fraser’s problems, clarifying: “as shown by the fact House of Fraser went into administration and indeed was mere hours from liquidation such was its parlous state, the business was dead, finished, destroyed.
“It was, and it is only through the incredible efforts of those within the Sports Direct group, including the remaining House of Fraser teams, that we are tackling these problems and trying to build a business with a future – a future for Frasers that is hopefully ‘bright’.”
However, he warned that the new year will bring more House of Fraser store closures as some stores are currently paying zero rents and are unprofitable.