Thousands of staff at Sports Direct are to enjoy a bumper windfall of more than £70,000 each next month after the sportswear retailer delivered a jump in sales and profits.
However, the chain scrapped plans to resurrect a contentious “super-stretch” bonus for its billionaire founder Mike Ashley, who earlier this year raised £100 million when he sold a 4 per cent stake in the business.
Having hit its financial targets with a 40 per cent surge in annual pre-tax profits to £207.2m, Sports Direct is to hand shares worth about £130m to some 2,000 of its 24,000 staff, including full-time shop assistants.
Under a bonus scheme that started in 2009, the average employee earning £20,000 who has been with the firm at least five years will receive 12,000 shares, worth about £75,000 at current prices.
Chief executive Dave Forsey said: “There is no doubt that the group’s record-breaking results were in the large part down to our colleagues and their hard work.
“The employee bonus share schemes have continued to drive this performance and we are pleased that eligible employees will be rewarded in August.”
Despite the windfall for shop staff, Sports Direct said it was looking for other ways to reward Newcastle United owner Ashley, who has not taken a salary since floating the chain in 2007.
A previous scheme, which would have delivered a potential £26m payout, was withdrawn last summer after investors threatened to reject it in a shareholder vote.
While the group will retain its “super stretch” targets for £310m in underlying earnings in 2013-14, rising to £360m in 2014-15, these will be treated as internal management goals instead of being linked to bonuses.
Forsey said last year’s summer of sport had helped revenues at the retailer jump to £2.2 billion in the year to 28 April, an increase of 20.9 per cent on the previous year.
He added: “The results for the year have benefited from the Uefa European Championships and the London Olympics, but have been achieved in a retail environment that remains challenging.”
The hike in profits came as like-for-like sales in the UK raced 11.2 per cent higher over the past financial year as the group strengthened its grip on the market following the collapse of rival JJB. Sports Direct has 396 stores across the UK and owns brands including Donnay, Karrimor and Slazenger.
Richard Curr, head of dealing at Prime Markets, said: “That we are a nation of sports fans has never been in doubt, but the sheer growth momentum at Sports Direct is in itself a championship-winning performance.
“With Andy Murray’s Wimbledon title and hopes for an Ashes series win, the fundamental drivers are all in place to maintain this pace of growth.”
Although trading since the start of the new financial year has been ahead of management expectations, Forsey cautioned that this performance may not be sustained for the full year, given the lack of major sporting events.
However, he added: “Whilst 2013 is a non-tournament year, there is no doubt that our compelling offer of exceptional quality and unbeatable value continues to resonate well with our customers.”