Sports Direct ups profits forecast

Sports World owner Sports Direct International was on course to make payouts to thousands of UK staff today after raising profit forecasts for the second time this year.

The group, controlled by Newcastle United owner Mike Ashley, has upgraded underlying earnings predictions for the year to April to "at least" £155m (€171.55m) after strong first-half trading.

This is the level at which the share bonus scheme it introduced in July to motivate staff will begin to kick in.

The scheme - which applies to all permanent UK staff with more than one year's service - will pay out 25% of base pay in shares which vest two years later.

The firm reported a 10% increase in underlying earnings of £99.1m (€109.68m) in the 26 weeks to October 26, slightly ahead of City expectations.

If Sports Direct achieves the first target, staff can gain an even bigger payout worth 75% of salary if the group makes underlying earnings of £195m (€215.8m) in the 2010/11 financial year and achieves debt targets.

The firm will also receive a boost from demand for replica football strips before next year's World Cup - although a later-than-usual launch of new kits will mean the benefit comes largely in the next financial year.

Chief executive Dave Forsey said Sports Direct had achieved a strong trading performance, while reducing the company's net borrowings to £362m (€400.65m), well below its £400m (€442.7m) full-year target.

Revenues across the group were 10.1% ahead at £756.9m (€837.7m) in the first half, with the UK retailing arm - which also includes brands such as Lillywhites and Field & Trek - up 14.9% to £586m (€648.57m).

Mr Forsey said: "Although the operating environment is likely to remain difficult, we have motivated colleagues, a fantastic unrivalled range of products for our customers, and the World Cup to look forward to."

The group has 371 stores in the UK and 63 overseas outlets, with more than 16,600 staff in total.

Seymour Pierce analyst Kate Heseltine said: "After a tepid phase, we believe the business is very much now back on track for longer term success."