• FY underlying pre-tax profit up 19.8% to GBP249.3m
  • Group revenue up 23.8% to GBP2.71bn
  • Analyst suggests online, international key to future revenue growth

Sports Direct's near 20% rise in full-year profit has been hailed as a strong performance by one analyst, who expects earnings growth to continue. 

Gross margins for the UK sporting goods retailer were up 180 basis points to 42.7%, while sports retail margins increased 260 basis points to 42.9%.

Sports Direct highlighted the company’s continued European expansion, including acquisitions in Austria and the Baltic region, as well as online revenue growth of 26.8%, lifting online’s revenue share to 17.1%.

Chief executive Dave Forsey pointed to tough comparatives and said the retailer had “significantly out-performed” its underlying EBITDA target.

“Overall trading since the year end has been in line with management’s expectations with some stronger weeks offset by England’s disappointing World Cup matches,” he added, stressing that the company continued to target underlying EBITDA of GBP360m in the current year.

Bank of America Merrill Lynch hailed Sports Direct’s strong performance and good start to the new fiscal year, adding that it expected gross margin to rise by another 140 basis points in the current year, driven by a less competitive UK sportswear market, more of a focus on better/best categories and lower input costs.

“This should lead to another year of double-digit earnings growth, in our view,” analysts Tushar Jain and Maya Chilaeva said, adding that online and international business would be key to future revenue expansion.