UK: Olympics help Sports Direct to H1 profit hike
- H1 pre-tax profit up 25% to GBP125.2m
- Group revenue up 22.5% to GBP1.089bn
- Company “on track” to deliver FY earnings target
Retailer Sports Direct International recorded a 25% surge in first half pre-tax profits, boosted by strong growth in online sales and the success of Team GB at the Olympics and Paralympics.
The 22.5% revenue increase was underpinned by an 18.1% rise in UK sports retail revenues, an 11.4% hike in international retail revenues, and a 150% surge (off a small base) in premium lifestyle revenues.
Online sales growth was 54% and brands provided a 15.7% revenue increase, resulting in underlying pre-tax profit growth of 26.4%.
“The first half has been another record period for Sports Direct with the London 2012 Olympics and Paralympics playing a significant part in the group's strong results,” said Dave Forsey, company chief executive.
“There is no doubt that Team GB's outstanding performance has helped increase the awareness and popularity of sport across the UK, and that we have maintained our position as the consumers’ champion.”
Forsey added that the company was “confident” of reach its full-year target of underlying EBITDA of GBP270m.
Bank of America Merryll Lynch analyst Richard Chamberlain believes the recent collapse of JJB Sports, along with lower input costs, should help to expand Sports Direct's margin from next year.
He adds that the retailer currently generates around 12.5% of its sales online, "and we see potential for this to rise to over 20% in three years' time.
"Online allows the company to sell a much wider range of products over a longer period of time. [It] should also help the company develop its business overseas and it is introducing multi-currency and multi-language options to support this expansion."
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