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World Cup boosts Sports Direct profits

Sportswear retailer Sports Direct had its biggest ever trading day on England’s first match of the football World Cup, helping it to notch up a 40% rise in underlying pre-tax profits.

Underlying pre-tax profit increased to £100.7m in the 26 weeks to October 24 as sales soared 8.3% across the group. EBITDA was up 32.5% at £131.3m. No like-for-like figure was given – Sports Direct, which is controlled by controversial tycoon Mike Ashley, only reports that annually.

The UK has driven the sales growth with revenue up 9.9% to £644.3m which the company attributed to strong sales in the build up to the World Cup. Chief executive Dave Forsey said the tournament contributed £15m to £20m of EBITDA and the sports retailer had its biggest trading day ever on England’s first match of the tournament.

Online sales have also grown and now account for 6% of sales in the UK, which the retailer hopes to grow further. It has benefitted from rebranding its fascia to read which has been rolled out across 316 of its 394 stores.

Forsey said that current trading was in line with management expectations. Despite rival sportswear chain JJB Sports warning that it was likely to break its banking covenants as trade suffered due to poor weather, Sports Direct insisted it had benefitted from the cold snap.

“We have lots of weather-appropriate products. We’re well stocked with footwear, winter coats and gloves. Its [JJB Sports] stores didn’t have appropriate products,” said Forsey.

Despite the promising figures Forsey still expected early 2011 to be tough.

Its international business continued to grow, with revenue up 4.6%. The company has bolstered its international portfolio with the acquisition of 51% share in Portugal’s third biggest sports retailer.

Sports Direct operates in seven countries across Europe but plans to expand to all 17 countries that have adopted the Euro by 2017.

The retailer also confirmed that a Serious Fraud Office investigation into the company and rival JJB Sports had brought no charges but the SFO continues to investigate individuals.

An Office of Fair Trading investigation into the sports retail sector is ongoing. Sports Direct said it had not been provided with details of any allegations, so could not comment on the matter.

Seymour Pierce analyst Freddie George said the results showed Sports Direct was on track for its EBITDA target of £195m after bonus scheme costs. He said: “The company will continue to benefit from the demise of JJB, which recently issued a profit warning.”

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