Sports Direct is to hand its staff a payout worth more than £50,000 this summer, after the sportswear giant met its profit targets under a lucrative share scheme.
The retailer will award 2,000 employees an average 12,000 shares in August, which – based on yesterday's closing price of £4.55 – are worth £54,600. This payout is in addition to the typical award of £15,000 made last August, compared with an average salary of £20,000 at the retailer.
The two-year share scheme that Sports Direct started in 2009 is significantly more generous than the much-lauded staff bonus paid by the John Lewis Partnership, comprising the eponymous department store chain and the grocer Waitrose.
More payouts are on the cards for employees from Sports Direct's ongoing share scheme, as the retailer yesterday said it was "certain" of hitting its target of underlying profits of £270m for the year to 28 April.
Dave Forsey, Sports Direct's chief executive, has previously described the share scheme as an "absolute game changer" for the retailer, in terms of its impact on improving staff retention, service in stores and the morale of its workforce.
This year's share award is equal to 75 per cent of employees' salary and is in addition to the 25 per cent of their pay cheque they received last August.
The current share bonus scheme operates along similar lines, with 8 million shares distributed among about 3,000 staff in 2015 and 26 million shares handed out in 2017 – providing increased profit targets are met for the next two years.
The group – which Mike Ashley founded in 1982 – has powered through the consumer downturn and its strength helped to send rival JJB Sports to the wall last year. The 470-store-plus chain grew its total sales by 14 per cent to £317m over the nine weeks to 31 March, boosted by surging online revenue.
Mr Forsey said: "The strength of this performance during the nine-week period continues to demonstrate the resilience of our business model, especially in the UK. Within our sports division online sales now represent about 15 per cent of total sports-retail sales."
Sports Direct will put to shareholders a new "super-stretch" bonus for Mr Ashley, its deputy executive chairman and owner of Newcastle United Football Club, in September. The group is likely to increase his earnings target from £290m to £310m for 2014.
A large part of the group's success has come from its strategy of buying brands which it then licenses to other retailers globally.
Sports Direct is considering submitting a first-round bid for the fashion label Bench, which is owned by Hg Capital. However, sources believe the private-equity firm will have to settle for a much lower price tag than the rumoured £100m.Reuse content