Sports Direct reported earnings dropped 27 percent in the first half ended October 28 due to the August buy-out of House of Fraser. Earnings improved slightly excluding charges and losses at its segment including Bob’s and EMS was reduced.
- Group revenue increased by 4.5 percent in the first half ended October 28. Excluding acquisitions, and on a currency neutral basis, Group revenue increased by 0.2 percent
- UK Sports Retail revenue fell 0.2 percent, largely due to store closures as part of the continued elevation of the portfolio. Premium
- Lifestyle rose 29.4 percent largely due to new Flannels stores
- House of Fraser, acquired 10 August 2018, revenue since acquisition was £70.1m
- European Sports Retail revenue fell 5.0 percent on a currency neutral basis, largely due to store closures
- Rest of World Retail revenue rose 26.2 percent on a currency neutral basis, largely due to the Bob’s/EMS stores in the US
- Group underlying EBITDA was down 4.7 percent to £148.8m. Excluding acquisitions and on a currency neutral basis, Underlying EBITDA was up 14.6 percent
- Underlying profit before tax down 26.8 percent to £64.4m
- Underlying free cash generation of £69.0m
- Net debt has increased to £505.5m, from £397.1m as at 29 April 2018 (FY18 H1: £471.7m)
In its statement, Sports Direct noted that sales in the Rest of World segment rose 28.1 percent to £100.7 million from £78.6 million a year ago. The segment reduced its operating loss to £4.9 million from £20.9 million.
Rest of World Retail includes the Group’s retail activities in the US under the combined Bob’s, Sports Direct and Eastern Mountain Sports fascia. It also includes the stores under the Sports Direct fascia in Malaysia. The prior year comparatives have been restated to include Malaysia, which was in the International (now European) segment in the prior year. Sports Direct completed its acquisition of Bob’s, which has 30 stores, and EMS, with 20 stores, in June 2017.
Mike Ashley, Chief Executive of Sports Direct International plc, said: “During the reporting period we acquired the trade and assets of House of Fraser and I would like to welcome my new colleagues to the Sports Direct Group. I have made my views clear that I believe the previous House of Fraser senior management team traded the business whilst it was insolvent for a long time, this means we have significant challenges ahead in turning House of Fraser around. However, I genuinely believe we have acquired a fantastic opportunity and with the efforts of Sports Direct and House of Fraser teams, and the support of the brands, local councils and landlords, we can turn House of Fraser into the Harrods of the High Street. Outside of the House of Fraser acquisition the Sports Direct Group has had another successful period reporting a 15.5 percent growth in underlying EBITDA to £180.3m. This is impressive in the context of the current struggles in the High Street and shows our elevation strategy continues to go from strength to strength. Excluding House of Fraser we anticipate we will be within our previously communicated underlying EBITDA growth range of 5-15 percent by year end, including House of Fraser we expect to be behind last year’s result.’