Sports Direct profits up 10%

British sporting goods retailer Sports Direct’s pre-tax profits increased by almost 10% to £160.6m (€203.6m) in the first half of the year, according to its latest set of accounts.

The group, which is owned by its founder and Newcastle United owner, Mike Ashley, saw its revenues surge 6.5% to £1.43bn as EBITDA rose to £203.1m, an increase of almost 11%.

On the back of the strong results, Sports Direct International chief executive, Dave Forsey indicated that the company remained on track to achieve its earnings guidance of £360m.

“The results for the six months were solid considering the adverse impact on performance during the period of England’s early departure from the FIFA World Cup in Brazil and the unseasonably mild weather during autumn reducing footfall.

“Trading since the period end has been in line with management 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 at least our full year internal underlying EBITDA target of £360m, before the charge for the Employee Bonus Share Schemes,” said Mr Forsey.

The group has continued to grow through a number of acquisitions and derivative agreements with the likes of Debenhams and Tesco.

Eight new European stores were opened by Sports Direct in the period covered by the accounts as part of the company’s continued expansion into the mainland.

In the first half of the year, the group increased its investment in Debenhams with the purchase of an additional strategic stake in the business, while it also has four concessions with Debenhams stores on a trial basis.

The company also acquired interests in Tesco and online retailer MySale during the period while in the US Sports Direct Fitness was established with the acquisition of 18 former LA Fitness gyms.

Sports retail increased 8.3% benefiting from an 11.1% increase in online revenues, while revenue from the brands division fell by 3.9% due to a decline in wholesale prices which the company attributed to an ongoing update of its wholesale business model.

Gross margin for the Group increased 90 basis points (0.9%) to 44% as the company continued to broaden its product range.

Net debt decreased in the period by 12% to £186.5m.