UK: Sports Direct Q3 ahead of expectations
- Q3 pre-tax profit up 14.3%
- Gross margin expans 190 basis points
- Sales climb 23.5%
Sports Direct International has booked a third-quarter performance ahead of management expectations and reiterated its full-year earnings guidance.
In the three months ended 27 October, pre-tax profit climbed 14.3% to GBP143.1m (US$234.7m) from GBP125.2m a year earlier. The group benefited from "significant" growth in the UK, Europe and online in the period, it said.
Gross margin improved 190 basis points to 43.1%, while sales were up 23.5% to GBP1.34bn.
Chief executive Dave Forsey said: "We have delivered another strong performance reflecting our continued focus on providing customers with exceptional quality and unbeatable value.
"The growth in group revenues and EBITDA has been ahead of expectations and achieved against a tough comparative that included the UEFA European Championships and the London 2012 Olympics."
The company said it is "confident" of achieving "at least" its full-year internal underlying EBITDA target of GBP310m.
Conlumino analysts said Sports Direct’s growth story continues to be driven by its expanding stores and brand portfolios, especially on an international level.
"International acquisitions during the period included major stakes in Sports EYBL and Sports Expert Group, Austria’s largest sporting goods retailer, and SIG in the Baltic region. Elsewhere, the company opened stores in Spain, Hungary and Poland. These will help Sports Direct on its way to achieving its long term goal of representation in all of the major European economies."
Bank of America Merrill Lynch analyst Richard Chamberlain said Sports Direct should benefit from the rise of the discounters and further growth in m-commerce/e-commerce.
"SPD has effectively wiped out its competition in UK mass market sportswear retailing and can now focus more on online growth and growing in the mainstream apparel market."
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