NEWCASTLE United owner Mike Ashley’s first step towards a potential £24m pay-out has been secured after more bumper results at his Sports Direct business.
The group, which has 395 stores – and brands including Slazenger, Donnay and Karrimor – posted underlying earnings of £240.5m in the year to April 29, well ahead of the £225m needed under the bonus scheme.
Ashley, the company’s executive deputy chairman, is on course to receive eight million shares in 2018 but the company must deliver earnings of £270m in this financial year, rising to £340m by 2015.
The North East’s richest man is not paid by the business that he founded and still owns 70% of.
But he received £929m in 2007 when he sold 43% of the business.
The company’s bonus scheme has also been motivating its workforce, with 2,000 of its 18,000 staff due for an average £15,000 windfall from a 2009-11 bonus scheme next month.
A new 2012-15 arrangement involving 3,000 workers passed its first earnings hurdle yesterday, fuelling hopes for 2,500 shares in 2015 and 7,500 shares two years later, an average of £36,000.
The two bonuses will make up the equivalent of more than two year’s average £20,000 wages of staff who meet a series of criteria including having worked there full-time for two years.
Sports’ revenues rose 13% to a record £1.8bn over the year, helped by an 82% boost in online sales and a 0.7% rise in underlying sales through its stores.
The record profit and sales beat forecast, but the group said current trading had been in-line with expectations and it was “very excited“ by the Olympics. Chief executive Dave Forsey said: “In spite of the low expectations surrounding England’s participation in Euro 2012 and the unseasonal weather, our core divisions are performing well.”
Shares have nearly trebled in value over the past two years, but were flat today despite the results coming in above City expectations.
Panmure Gordon analyst Philip Dorgan said it was disappointing that the company had not resumed dividend payments. But Sports said it was best to build up its balance sheet as it continued to look at “inorganic growth opportunities“, hinting that more acquisitions could be on the cards.
The company recently bought designer clothing chain Flannels, as it looks to build up its premium lifestyle division, which analysts believe has the potential for strong growth.
Over the past year, Sports Direct has been building up the division by taking stakes in retailers including USC, Cruise and Van Mildert to help it better compete with rival JD Sports, which owns the Bank, Scotts and Cecil Gee brands.
Meanwhile, beleaguered rival chain JJB Sports said it was seeking another round of rescue funds after seeing its turnaround hopes derailed by poor summer trading.
The move comes just three months after the chain landed £20m from American retailer Dick’s Sporting Goods and a further £10m from existing shareholders.