Sports Direct International plc reported comparable store sales grew 10.5 percent in the fiscal year ended April 27 on top of a 10.6 percent increase in the prior fiscal year, even without the benefit of the London Olympics, the European soccer championships or a strong performance by its national team at the FIFA World Cup 2014.



The rapidly expanding British retailer reported revenue at its Sports Retail segment, grew 24.1 percent to £2.27 billion ($3.6 bn). Much of the growth came from 134 stores in Austria and the Baltics, which Sports Direct acquired control of last year in two separate acquisitions. Between store openings and the acquisitions, the segment added 2.4 million square feet of retail space, up 47 percent from a year earlier. At year end, the company operated 648 stores in 19 European countries, including 401 that operated under the Sports Direct banner in the United Kingdom.

 

Online revenue, meanwhile, grew 26.8 percent and now represents 17.1 percent of all Sports Retail sales.
Segment gross margin increased by 260 basis points (bps) to 42.9 percent thanks to ongoing investment in better and best product ranges and further development of in-house brands. Operating costs increased 36.8 percent to 28.9 percent of revenues. Reported profit before tax was up 15.6 percent to £239.5 million ($383 mm). Second half sales were up 25.5 percent to £1.14 billion ($1.8 bn), while gross margins improved 280 basis points to 42.5 percent during the period. The change in the Euro/Sterling exchange rate had a negative impact of £5.6 million ($9 mm) on results for the fiscal year.

 

While Sports Direct owns 28 brands through its Brands segment, its Sports Retail segment has partnered closely with Nike and Puma in the U.K. and Europe. It recently completed a 9,000-square foot Nike shop at its flagship store near its headquarters in Shirebrook, which houses some of the only training centers operated by Nike and Puma on a retailer’s premises.

 

 

Brand segment revenues increased 4.1 percent to £218 million ($348 mm). Gross margin fell 180 basis points to 43.1 percent. The segment’s portfolio includes Dunlop, Slazenger, Everlast, and the outdoor brand Karrimor.

 

 

CEO David Forsey said the company’s fiscal 2014 EBITDA significantly exceeded the goals set in the company’s 2011 employee bonus plan despite a particularly tough comparison against the prior year, which included the UEFA European Championships and the 2012 London Olympics.

 

 

Already the largest sporting goods company in the United Kingdom, Sports Direct shifted its focus to Europe after seeing online sales to customers outside the United Kingdom reach 35.1 percent of its online sales at its Sports Retail segment in fiscal 2013. That figure rose to 46.5 percent in fiscal 2014, when 25.1 percent of visits to Sportsdirect.com were made using mobile devices.  In Fiscal 2015, the company will begin offering in-store pick, online gift cards and the opportunity to open a credit account to its online customers. It plans to break ground in September on 600,000 square feet of new warehouse and office space at its corporate headquarters in Shirebrook.

 

Despite England’s early loss in the FIFA World Cup 2014, management affirmed its guidance, which calls for Group EBITDA to grow about 8.5 percent in fiscal 2015 to £360 million.