The sportswear retailer Sports Direct vowed yesterday not to be beaten on the price of England shirts next year, as it posted a 41 per cent drop in half-year pre-tax profits after taking a hit on exchange rate fluctuations.
The chain founded by Mike Ashley, who owns Newcastle United football club, saw its sales rise in the six months to 25 October. Yesterday, it raised its underlying earnings forecast for the year.
Sports Direct expects to get a boost from sales of England shirts next year and has promised to maintain its low-price strategy on tops and World Cup- related products for the tournament that kicks off in South Africa in June.
Dave Forsey, the chief executive of Sports Direct, said: "We will have the broadest and best value – that has always been our strategy. There is a massive range of associated products over all the price points."
Mr Forsey forecast a "tough" start to the new year for the wider retail sector but said: "We are lucky to have the new England away shirt [being released] in March and the World Cup as a catalyst [for 2010]." It is unclear if the likes of Asda and Tesco will be able to sell official England shirts next year.
Sports Direct pointed out that it also had 12 stores in Slovenia, who England have drawn in their qualifying group in the tournament. Mr Forsey said he was "pleased with the opportunities" the draw presented.
Over the half-year, Sports Direct's pre-tax profits fell by 41 per cent to £57.8m, largely resulting from the impact of foreign exchange rate fluctuations on hedging arrangements. Stripping out this impact and those of disposals on its listed investments, its underlying pre-tax profits were up 39 per cent at £71.9m. Mr Forsey said : "We are very pleased with the performance both internationally and in the UK. It is a testament to the hard work we have put in over the last 18 months."
Sports Direct said it now expected to deliver full-year underlying earnings before tax, interest, depreciation and amortisation of at least £155m, compared with its previous guidance of £150m. It also lowered its net debt to £362m, down from £431.1m as of 26 April 2009, but will not be paying an interim dividend.
Last month, Sports Direct hired Keith Hellawell, the Government's former drugs tsar and current chairman of Goldshield Group, as its non-executive chairman after a two-and-a-half-year search. Mr Forsey said: "He brings a wealth of experience, not just across business but in running large organisations."
Sports Direct is currently involved in three enquiries. Its purchase of 31 stores from JJB was referred to the Competition Commission in August, while it is also the subject of investigations by the Office of Fair Trading and Serious Fraud Office.
Officers from both organisations visited Sports Direct's head office on 10 September to investigate alleged price-fixing activities after its rival JJB turned whistleblower. Sports Direct denies any wrongdoing.