Retailer Results / Sports Direct

07/07/2016

Sports Direct

Trading Update
Preliminary Results for the Year ended 24 April 2016

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10/12/2015

Sports Direct

Trading Update
H1 - 16 weeks to 29 November 2015

Highlights

• Sports Retail revenue increased by 2.5 per cent on a currency neutral basis
• Sports Retail gross margin increased by 110 basis points to 45.6 per cent
• Sports Retail gross profit increased by 5.2 per cent on a currency neutral basis
• Group underlying EBITDA increased by 7.6 per cent to £218.5m
• Underlying profit before tax up 3.6 per cent to £166.4m

Summary

Trading has been in line with management expectations with group revenues were up 2.0 per cent on a currency neutral basis to £1,433.7m in the 26 weeks ended 25 October 2015 ("FY16 H1"), compared with £1,432.9m for the 26 weeks ended 26 October 2014 ("FY15 H1"). However, the City’s expectations of c.9 per cent growth were missed and so, overall, it will leave some investors disappointed.

Sports Retail revenue increased by 2.5 per cent on a currency neutral basis and revenue in the Brands division increased by 10.2 per cent to £113m (FY15 H1: £102m), due to growth in Europe and the US. Premium lifestyle revenue was down 12.2 per cent largely due to the closure of a number of USC stores during the period.

The Sports Retail division achieved sales growth of 2.5 per cent on a currency neutral basis against a comparative which included the impact of the FIFA World Cup in Brazil. During the period, gross margin increased 110 basis points to 45.6 per cent (FY15 H1: 44.5 per cent), benefiting from a higher proportion of 'better' and 'best' Group branded products.

At period end, the Group had 455 stores in the UK (excluding Northern Ireland), with a total of c. 5.0m sq. ft.(2) (FY15 H1: c. 4.5m sq. ft.).

Continued collaboration with key brands is planned, as is working towards the introduction of more specialist performance areas within stores, such as football, running, outdoor and fitness. Target of 30-40 store openings in the UK this year, having opened 28 new stores in the period, including nine relocations, and closing 13.

Online sales continue to grow, driven by enhancements made in the prior year including the introduction of 'click and collect', a guest checkout and improvements in language and currency conversion on European sites. Investment has been made in the online channel by enhanced the platform for mobile and tablet devices. The online offer has also been enhanced, with a greater range of products and sizes, which has benefited sales growth. Online sales are not reported.

Dave Forsey, Chief Executive of Sports Direct International plc said: “The Group has delivered another excellent set of results particularly given the strong comparable sales generated in the build up to the FIFA 2014 World Cup and after a generally mixed summer for the retail sector.

“Within Sports Retail out commitment to upgrading our store portfolio continues to deliver gross margin growth and is a significant contributor to our strong EBITDA result.”


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