SPORTS Direct has insisted that it is on track to hit full-year profit forecasts despite seeing a fall in gross profits.
The sportswear retailer, run by Newcastle United owner Mike Ashley, said that its shop estate generated higher sales than during last year’s World Cup summer after a series of store openings.
The company posted sales of £368m in its retail division in the 13 weeks to July 25, up 0.8%, although last year’s boost from World Cup replica shirts and other products meant UK retail sales fell by as much as 40% during one week this year. Gross profit fell by 5.7% to £174m in the period.
However, Sports Direct opened nine stores in the period, offset by two closures and two shop relocations. Its retail profits dipped 6.6% to £156m in the 13-week period.
Across the group, which has 350 UK stores and owns sporting brands including Dunlop, Karrimor and Slazenger, sales were 0.5% higher at £410m. Profits fell 5.7% to £174m.
Chief executive Dave Forsey said the summer’s trading kept the company on course to meet its full-year target for underlying earnings of £215m. This factors in the £2m paid to Dunlop- sponsored golfer Darren Clarke as a success fee for winning the Open Championships in July.
Staff will stand to benefit from their own bonus scheme if the company is successful in delivering on the £215m figure in the year to April.
Some 2,000 staff have already received average share payouts worth more than £40,000 after the company hit its profits target for the second year in a row.
The bonus scheme, announced in 2009, is seen as a key factor in the chain’s improved performance over the past two years, prompting it to be continued for the next four years with more stretching targets.
Nick Bubb, a retail analyst at Arden Partners, said the company continued to “run rings” around rival JJB Sports, while Panmure Gordon’s Nick Dorgan praised the firm for a decent set of figures.
Dorgan added: “Sports Direct has done a fantastic job in incentivising its staff, which should continue to have meaningful benefits.”
