Sports World owner raises earnings target

Sports World owner Sports Direct International today raised its annual earnings forecast after enjoying a jump in sales during the summer.

The chain, which also trades as Gilesports and Field & Trek, expects to achieve underlying earnings of at least £150m (€171m), ahead of London market forecasts for a figure in the region of £147m (€167m).

Sales at the retailer, controlled by Newcastle United owner Mike Ashley, rose 10% in the 13 weeks to July 26 to £375m (€427m) while gross profit was up 5% at £157m (€179m) over the same period.

Since the end of July, Sports Direct said trading continued to be ahead of last year. The company has more than 350 stores in the UK and also owns sports brands including Karrimor, Slazenger and Dunlop.

Matthew McEachran, an analyst at Singer Capital Markets, said earnings forecasts for next year were likely to increase by 4% in the wake of today’s trading update, and as confidence and proximity to the 2010 World Cup increase.

He added: “We believe this performance has been largely driven by improvements within the UK retail division, where the back-to-basics strategy and a combination of seasonal conditions, weak competition and promotions, have contributed towards the uplifts.”

Singer also noted the business had moved a step closer to the earnings target of £165m (€188m) which would trigger a full pay-out under a new staff incentive scheme.

Sports Direct shares opened more than 3% higher at 120.3p today.