Profits grew twice as fast as sales at Sports Direct International plc during the 13 weeks ending July 25 despite the British team’s poor showing in the World Cup soccer tournament, the U.K. retailer reported in its interim management statement last week.
Group total sales reached £408 million ($637 mm), up 8.8% from £375 million ($558 mm) in the first quarter a year earlier. Retail gross profits increased 17.8% to £185 million ($289 mm) from £157 million ($234 mm).
Those sums included an 11.6% increase in retail sales £365 million ($571 mm) and a 20.1% increase in retail gross profit to £167 million ($261 mm). The brand division’s revenue declined 6.5% to £43 million ($67 mm), but the corresponding gross profit was flat at £18 million ($28 mm).
The performance distances Sports Direct from two of its biggest domestic competitors. JJB Sports lost £D70 million in the year ended Jan. 31, 2010 and is being questioned as part of a price fixing investigation that has also ensnared Sports Direct. Outdoor specialty retailer Blacks Leisure Group, meanwhile, reported its group sales tumbled 30% during the 17 weeks ended June 20 following a massive restructuring that involved the closing of 107 stores.
In the first quarter, Sports Direct’s U.K. Retail operation opened eight stores and closed two representing a mixture of new core, temporary and Field & Trek stores. International retail opened one store in Cyprus.
“Despite the performance of the England team during the World Cup, these results clearly show that Sports Direct had a good World Cup, although with better team results it could have been ever stronger,” said CEO Dave Forsey.
Forsey said that since the end of July the group’s underlying performance has remained strong and in line with management expectations. He disclosed that the company has already reduced its net debt to EBITDA ratio to 1.5, well ahead of its April 2011 target date. The ratio was 1.9 as of April 25, the end of the company’s fiscal year. He also affirmed his board’s full year underlying EBITDA guidance, issued in late July, of around £195 million, after a £10 million charge for bonuses.