Jul 19, 2012
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Sports Direct year profit soars

Jul 19, 2012

Britain's biggest sporting goods retailer Sports Direct posted a strong rise in full year profit boosted by buoyant online sales, which helped it win market share from rivals.

Photo: Sports Direct

The firm, controlled by billionaire Newcastle United soccer club owner Mike Ashley, on Thursday said its underlying pretax profit rose 17.3 percent to 162.1 million pounds ($253.24 million) in the 53 weeks to April 29.

That compares with analysts' consensus forecast of 160 million pounds and 135.5 million pounds in the 2010-11 year.

Sports Direct, which owns Sports World and Lillywhites stores as well as brands including Slazenger and Dunlop, said sales rose 13 percent to 1.84 billion pounds in the period.

Online sales rose 82 percent during the year and now represents 11.6 percent of its retail sales, the firm said.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 240.5 million pounds meant that, subject to shareholder approval in September, Ashley will be granted eight million shares that vest in 2018 if performance criteria are met over the next three years.

The company said because it exceeded annual EBITDA targets many of its staff would be awarded shares next month as part of a bonus scheme.

"Trading since the period end has remained in line with management's expectations where increased investment in margin has been funded by stronger retail sales," chief executive Dave Forsey said in a statement.

"In spite of the low expectations surrounding England's participation in Euro 2012 and the unseasonal weather our core divisions are performing well."

With consumers' disposable incomes being squeezed by rising prices, muted wages growth and government austerity measures many British retailers are still struggling.

Sports Direct has, however, coped well in the economic downturn, benefiting from its value offer, a growing internet presence, a highly motivated staff due to the lucrative bonus scheme, European expansion and the woes of UK rivals JJB Sports and Blacks Leisure.

Shares in the group, over two thirds of which are owned by Ashley, have risen 39 percent in 2012.

The stock closed at 294.7 pence on Wednesday, valuing the business at 1.77 billion pounds.

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