Ashley says he’ll reach his targets
Jan 22 2008 by Peter McCusker, The Journal
SPORTS World retailer Sports Direct International (SDI) said it would meet profit forecasts despite increasingly difficult trading this year.
The group, run by Newcastle United owner Mike Ashley, has been badly hit by England’s failure to reach the Euro 2008 football championships, but said underlying earnings for the year to April would exceed the £137.7m expected by the City.
In a Christmas trading statement, SDI said sales during the 11 weeks to January 13 were £280m, with group gross profit of £126m.
Last month SDI estimated it would suffer an underlying earnings hit of up to £70m over the next 12 months because of the England football team’s absence from next summer’s flagship tournament.
Chief executive Dave Forsey said yesterday: “We expect the retail trading environment to become increasingly difficult over the next six months.
“However, the resilience of our business gives us the confidence to repeat guidance on full year performance that we gave on December 19.”
In December, Sports Direct revealed half-year revenue to October 28 last year of £668m, down 7%.
Half-year profits at the business, which has major licensing deals with England replica shirt manufacturer Umbro, plunged nearly 70% to £21.2m this year, down from £70.1m.
The company also owns some of Britain’s most popular sports brands including Slazenger, Dunlop and Kangol.
Football-mad Mr Ashley, who owns 70% of the company, took it public in February last year, with the flotation price of 300p a share netting him a £929m fortune.
The shares have since fallen to less than two-thirds of their float price as the group issued a series of gloomy trading updates.
The company, which has been criticised by many in the City for its poor communication since it came to the market, did not give comparables.
Philip Dorgan, an analyst at Panmure Gordon, said: “The statement itself is not full enough, but we didn’t expect anything different at this stage.
“Far from buying the company back, Mike Ashley needs at some stage in the next couple of years to sell some shares to increase liquidity in the stock.
“The share buyback programme runs counter to this and at an average price well above the current share price, we believe that it needs to end, the company needs to meet (and perhaps beat) its forecast and settle down to life as a plc. Is this too much to ask for?”
Shares in Sports Direct were down 2p at 96p.
