Sports Direct cautious despite profits boost

The owner of Sports World stores and brands including Slazenger and Donnay warned the early part of 2011 will be extremely challenging for all retailers, meaning it planned to stick by current targets for full-year earnings.

It reported a strong trading performance for the six months to October 24, when profits should be significantly above a year ago. One City analyst suggested this could mean a rise of at least 30 per cent to 93m.

Sports Direct - controlled by Mr Ashley, the owner of Newcastle FC - said the boost from the World Cup in the first quarter had continued as group sales were up 5.4 per cent to 295m in the nine weeks to September 26. Retail profits lifted 6.1 per cent to 105m.

The sales figure is lower than the 8.8 per cent rise seen in the first quarter but in line with expectations, Matthew McEachran of Singer Capital Markets added.

Sports Direct said it believed its staff bonus share scheme had played a key role in delivering the strong first half performance.

More than 2,000 staff were given a boost in July when Sports said annual earnings of 160.4m were enough to trigger the first stage of its bonus scheme. All permanent staff with at least two year's service landed shares worth 25 per cent of salary, payable in two years.

Chief executive Dave Forsey said the company planned a new scheme that covered the next two financial years, including 2012/13 when the London Olympics and Euro 2012 football tournament should boost trade.

The Nottinghamshire-based company has more than 350 stores in the UK, the majority of which trade under the Sports Direct.com fascia with others branded Lillywhites, McGurks, Exsports, Gilesports and Hargreaves and Field & Trek.