Sports Direct bounces back with profits leap

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Britain’s biggest sports store group, Sports Direct, cheered shareholders with the news that profits leapt 15 per cent over the Christmas period despite a disappointing trading update in December.

The group, controlled by billionaire Newcastle United soccer club owner Mike Ashley, said it is confident of hitting full-year targets following the up- date.

The group said gross profit for the 13 weeks to January 26 rose to £280.7m, up from £244.8m a year before.

In December, the firm was less bullish about trading than usual after exceeding its expectations in the first half.

Sports Direct, which entered the FTSE 100 index in September, has grown rapidly during the downturn through a mixture of popular cheap offerings, acquisitions, online growth and the demise of rivals like JJB Sports.

It now wants to expand across Europe where it operates in 19 countries. Total sales rose 11.2 per cent to £655.4m in its third quarter, including a 6.9 per cent rise in its core sports retail division.

Sales at its fashion arm, which has around 160 stores under names including USC and Cruise, rose 53 per cent.

The firm said it is very confident of at least achieving its target of underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of £310m for 2013-14, before a charge for bonus share schemes.

Sports Direct gave no update on its plans to strike a partnership with department store chain Debenhams, which could entail the sports firm’s goods being sold in its stores.

In January, Sports Direct bought and then promptly sold a stake in Debenhams, replacing it with an option that could see it buying a 6.6 per cent stake next year, and has been in talks to work with the department store on an operational level.