Sports Direct reports revenue rise of 6.5 percent in H1

REPORT_ In the 26 weeks or first half ended October 26, 2014, revenues at Sports Direct International were up 6.5 percent to 1,432.9 million pounds (2,250 million dollars) compared with 1,345.1 million pounds (2,106.7 million dollars), same period, last year. Sports Retail revenue increased 8.3 percent, benefiting from an 11.1 percent increase in online revenues. Revenue in the brands division decreased by 3.9 percent due to a decline in wholesale sales as we update our wholesale business model.

Gross margin for the group increased 90 basis points to 44 percent compared to 43.1 percent in the first half of FY14 as a result of the continued broadening of our product range and on-going investment in group brands.

Commenting on the financial development, Dave Forsey, chief executive of Sports Direct International said, “The results for the six months were solid considering the adverse impact on performance during the period of England's early departure from the FIFA World Cup in Brazil and the unseasonably mild weather during autumn reducing footfall. Trading since the period end has been in line with management expectations. We remain confident of achieving at least our full year internal underlying EBITDA target of 360 million pounds (563.8 million dollars), before the charge for the Employee Bonus Share Schemes.”

At the end of the first half, the group had 434 stores in the UK excluding Northern Ireland. The company aims to open around 30 to 40 new stores in the UK this year, having opened 18 new stores in the period, including five relocations. It has also opened four concessions within Debenhams stores during the period. Across Europe, the company closed four stores in Austria, opened two new stores in Poland and one store in each of Estonia, Portugal, France, Cyprus, Hungary and the Czech Republic. During the period, the company increased shareholding in the Icelandic joint venture from 25 percent to 40 percent.

During the period, Sports Direct established a new fitness division, Sportsdirect Fitness.com, with the purchase of 18 gyms from LA Fitness. Works are also underway to build a 60,000 sq. ft. combined gym and sports retail concept in Aintree, which is expected to be fully open by the end of December 2014. Similar sites are also currently being developed in St Helens and Keighley.

Sales in the premium lifestyle division during the period were down by 2.8 percent, largely due to the closure of loss-making USC and former Republic stores since the prior year. Gross margin reduced to 38.4 percent. Brands division total revenue decreased 3.9 percent and wholesale revenues were down 4.4 percent. Brands gross margin increased by 90 basis points to 42.8 percent and wholesale gross margins increased 70 basis points to 32.7 percent.