Sports Direct on the right track with £260m profit

On the eve of its promotion to the FTSE 100 index, Mike Ashley's Sports Direct International said it had got off to another strong start to the new financial year.

Sales from the group, which is controlled by the billionaire Newcastle United owner, rose by 18 per cent in the three months to the end of July, with gross profit up 23 per cent at £260m.

Sports Direct's retail sales, from a similar 4 million square feet to a year ago, rose by 14 per cent to £505m. The "Premium Lifestyle" sales, which come from the Republic and USC fashion chains, almost doubled to £57m.

The chief executive Dave Forsey said: "The group has experienced a strong start to the year with trading ahead of management's expectations." He added: "This performance is in part attributable to the historic investment in gross margin and the on-going investment in product range and availability; and continued optimisation of our online and in-store product offer."

Shares in the company rose 14.5p to 729p, valuing Sports Direct at £4.4bn. After the market closed, the index complier FTSE International confirmed the retailer is being promoted into the blue chip FTSE 100 index from 23 September.

Despite the outperformance Sports Direct did not raise its target of £310m of earnings before interest, tax, depreciation and amortisation for the full year. But analysts said that they expected it to do so as the year progressed.