Sports Direct reports surging sales and profits in full year

Group underlying profit before tax increased 19.8% to £249.3m. Group underlying EBITDA, before employee share scheme costs, increased 15% to £331.1m, representing a “significant” out-performance of its target of £260m set under the 2011 Employee Bonus Share Scheme.

Like-for-likes at the sports retail division jumped 10.5% and online revenues were up 26.8%, and now represent 17.1% of all sports retail sales.

Group revenue was up by 23.8% to £2.7bn, driven by the retail division, where revenues increased 25.9% in the year to April 27.

Sports Direct’s premium lifestyle revenue grew 49.4%, propelled by the acquisition of Republic in February 2013.

Sports Direct chief executive Dave Forsey said: “Overall trading since the year end has been in line with management’s expectations with some stronger weeks offset by England’s disappointing World Cup matches.”

Group gross margin in the year increased by 180 basis points from 40.9% to 42.7%. Sports retail gross margin increased by 260 basis points to 42.9%, while the brands division gross margin decreased to 43.1% from 44.9%.

The retailer said it accelerated its European expansion in the year including acquisitions of Eybl and Sports Experts AG (EAG) in Austria, and Sportland International Group (SIG) in the Baltic region.

It has secured 84 new license deals with contracted values of $51m over the life of the agreements.

Sports Direct said the second and final part of its 2009 Employee Bonus Share Scheme vested in August 2013.

Forsey said: “We have delivered another record year of out-performance especially within our sports retail division. This success is underpinned by our core strategy, offering our customers a wide range of products which represent exceptional quality and unbeatable value.

 “Through both individual hard work and operating as a team, against a particularly tough comparative which included the UEFA European Championships and the 2012 London Olympics, we have significantly out-performed the third underlying EBITDA target of £260m set under the 2011 Employee Bonus Share Scheme. This means that the Group has now successfully met the first three targets and the Board is very confident of achieving the final target of £300m under the 2011 Employee Bonus Share Scheme.

 “Consistent with previous guidance, we continue to target underlying EBITDA (before share scheme costs) of £360m for the current period.”

On Wednesday owner Mike Ashley withdrew from the 2015 Bonus Share Scheme following pressure from the City.

The retailer said it recently signed a new £688m committed, unsecured revolving credit facility that will remain in place until September 2018, “providing a strong foundation on which to deliver our growth plans over the next four years”.

Sports Direct opened about 300,000 net sq ft of additional retail space across the UK, and refitted a further 300,000 sq ft. In Europe it opened about 200,000 net sq ft of retail space in its existing business as well as acquiring businesses in Austria and the Baltics.