DCSIMG

Good sets of results in store for sports and cafe chains

SPORTS Direct and the owner of coffee chain Costa will prove there is money to made in retail this week when they provide updates to the City.

Mike Ashley’s Sports Direct International will unveil higher half-year profits on Thursday after taking advantage of the demise of rival JJB Sports and benefitting from Olympic fever.

The group, which has nearly 400 stores and owns brands including Slazenger, Donnay and Karrimor, is expected by brokers Numis to report a 20 per cent rise in underlying earnings to £169m.

Chief executive Dave Forsey said the period to September was buoyed by demand for products linked to the London Olympics and an “excellent” back-to-school period.

The improvement by Sports Direct, which is majority owned by Newcastle United owner Mr Ashley, came in a period when JJB Sports conceded defeat in its battle for survival.

Sports Direct bought 20 stores from JJB’s administrators but this meant the closure of another 133 sites with the loss of around 2,200 jobs.

Leisure group Whitbread will reveal further strong growth in sales at its coffee business Costa tomorrow amid ongoing speculation a spin-off will be on the cards.

Costa, which has nearly 1,400 outlets in the UK, is forecast by analysts at Barclays Equity Research to reveal like-for-like sales growth in its third quarter of six per cent.

It has consistently been the top performer in the group’s portfolio, which also includes hotel chain Premier Inn and restaurants Beefeater and Brewers Fayre.

Shares in Whitbread are 50 per cent higher than they were at the start of the year.

The coffee chain is also expected to benefit from recent bad publicity for rivals Starbucks and Caffe Nero regarding their UK tax positions.

Wyn Ellis, analyst at brokers Numis Securities, said: “If Costa can demonstrate that the brand has legs in international markets then the earnings growth potential over the medium term should be transformational, paving the way for a possible spin-off for Costa.”

Whitbread financial director Chris Rogers was unveiled earlier this year as managing director at Costa, in a move which fuelled speculation that a demerger was on its way.

Analysts have previously estimated the Costa chain could be worth £1.5bn.

 

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