Sports Direct hails strong Christmas trading but remains tight-lipped over Debenhams deal
Sales jumped 11% to £655 million in the 13 weeks to the end of January
Thursday 20 February 2014
Sports Direct remained tight-lipped yesterday over negotiations to stock its goods in Debenhams department stores, but it did reveal a record Christmas as shoppers flocked to the high street retailer.
The chain, owned by the billionaire businessman Mike Ashley, said sales jumped 11 per cent to £655.4m in the 13 weeks to the end of January, with gross profits up 14.6 per cent to £280.7m on a year earlier.
The shares closed up 51p, or 7.1 per cent, at 767p, still off their December highs when a lacklustre set of interim results sent them plummeting 13 per cent.
Nick Bubb, an independent retail analyst, explained: “Last time the company reported, the City was disappointed by slower trading and the lack of an upgrade, but [today’s results] will hopefully keep people happy.”
The company is still on track to hit a full-year underlying profit target of £310m – meaning massive windfalls for the top 10 per cent of managers, although the business has been criticised for employing staff on zero-hours contracts.
Dave Forsey, the chief executive, said: “Despite tougher comparisons during the period, Sports Retail continues to perform well, driven by our focus on exceptional quality, unbeatable value and availability.”
He said online was performing particularly well overseas, with sales across its foreign business, notably Austria, Germany and the Baltic countries, expected to overtake the UK equivalent.
The sports retail division’s sales rose 6.9 per cent to £529.9m, with profits up 12.9 per cent to £230m, while the brands part of the business, including Slazenger, Donnay and Everlast, was up 15.5 per cent to £54.3m. Premium lifestyle sales were up 52.5 per cent to £71.2m with gross profit increasing 39.2 per cent to £28.4m.
Mr Forsey had no update on a complex put deal with Debenhams, where Sports Direct has placed a bet with an unknown third party that the department store’s share price will drop. The bet was made after Sports Direct bought a 4 per cent stake in Debenhams, persuaded the board to open negotiations, then dumped the shares days later.
The City was left perplexed by the deal, especially as it fell on the busiest reporting day of the year for retailers.
Sports Direct is also at odds with one of the world’s biggest sports suppliers, Adidas, over the German company’s decision to ban the retailer from selling next season’s Chelsea football kit, with some suggesting that Adidas is unhappy with the layout of Sports Direct stores.
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