Discounts boost Sports Direct

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Sports Direct reported a rise in third quarter gross profit as stronger margins helped offset weaker than expected sales growth caused by a poor winter season for its Austrian business.

The firm, controlled by founder and Newcastle United owner Mike Ashley, said on Thursday gross profit for the 13 weeks to Jan. 25 increased 7.6 per cent to £346.9m.

The rise was helped by a 280 basis point gross margin increase at its core retail sports business, where the firm’s mix of aggressive discounts and broad ranges have helped it edge out rivals and dominate the UK market.

Total group sales grew by just 2.6 per cent, ahead of a 1.5 per cent rise in its second quarter but behind half year growth of 6.5 per cent. Analysts at Goldman Sachs had expected growth of 4.2 per cent for the third quarter.

Sports Direct said it was confident of at least achieving its full-year core earnings target of £360m, before a charge for bonus share schemes.