CLOTHING retailer Sports Direct has marked its promotion to the City’s premier league with a better-than-expected jump in quarterly sales and profits.
The group, founded by Newcastle United owner Mike Ashley, has seen its shares more than double in value since they made their market debut in 2007, and was admitted to the FTSE 100 in last night’s reshuffle.
Chief executive Dave Forsey said Sports Direct remained on track to meet its “stretch” target for underlying profits to reach £310 million this year, adding: “The group has experienced a strong start to the year with trading ahead of management’s expectations.”
Group sales for the 13 weeks to 28 July rose 18.2 per cent to £613.3m, helping gross profits soar 23.2 per cent to £260.1m as the firm continued to benefit from the high street revival and the demise of rival JJB Sports.
In July, the retailer unveiled a 40 per cent leap in pre-tax profits to £207.2m for the year to 28 April and said trading since the start of its new financial year was ahead of management forecasts.
That was confirmed in yesterday’s trading update, with sales at its core sports retail arm up 14.5 per cent to £505.3m and gross profit up 20 per cent at £215.6m.
Retail analyst Nick Bubb said the figures were “impressive” and even England’s draw against Ukraine in Tuesday’s World Cup qualifier “should not spoil Mike Ashley’s mood at this stage”.
Last year’s surge in profits led to bumper windfalls for staff, with shares worth about £130m handed out to some 2,000 of its 24,000 employees, but the group has been criticised for employing many part-time workers on “zero hours” contracts, where they do not know how much work they will get each week.
Law firm Leigh Day last month said it was launching an employment tribunal case to test the legality of the company’s treatment of its part-time workforce, but a spokeswoman for Sport Direct said the group, which has about 400 stores across the UK, would not comment on the issue.
The retailer also owns a stable of brands including Dunlop, Karrimor and Slazenger, with sales from this division growing 4.3 per cent to £50.9m, while its “premium lifestyle” arm – which includes the Cruise designer label chain previously owned by Sir Tom Hunter’s West Coast Capital – saw sales almost double to £57m following the acquisition of 114 Republic stores from administrators in February.
Freddie George, retail analyst at Cantor, said Sports Direct was one of few UK retailers that had “exciting prospects” for its domestic business, despite “minimal” growth in the size of its core estate, which stands at about four million square feet.
He added: “It will continue to broaden its ranges to include tangential sporting categories to football and running, including fishing and swimming.
“It will also look to enhance its stable of brands, which now cover a broad spectrum of the sports and street-wear market, appealing to all age groups and demographics.”
Sports Direct listed in February 2007 and is about 64 per cent owned by Ashley.