Sports Direct International Plc, Britain's biggest sporting goods retailer, posted a better-than-expected 7.4% increase in first-half underlying earnings and said it was on track to meet market expectations for the full-year.

 

“With the economic situation and trading environment likely to remain extremely difficult, our back to basics strategy is working for us,” chief executive Dave Forsey said in a statement. “The board remains comfortable with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) expectations of 135 million pounds ($210.2 million) for the full year [to end-April] 2009,” he added. In the previous year Sports Direct made 150 million pounds.

 

However, Sports Direct cut its interim dividend payout by 41% to 1.22 pence.

 

In the six months ended Oct. 26, underlying EBITDA reached £89.8 million, up from £83.6 million a year ago. Most of the increase resulted from gains related to currency swings.

 

According to Reuters Estimates, analysts were looking for about £82 million.

 

Sports Direct, which owns Sports World and Lillywhites stores as well as brands such as Slazenger, Lonsdale, Everlast and Dunlop, said group revenue was up 2.9% at £687.7 million, calling the numbers “a solid set of results in what was a very tough trading period”.

 

A 1.8% drop in retailing revenue was more than offset by growth in wholesale and licensing income. Profit margin increased 10 basis points to 43.4%.

 

Forsey said rhe main U.K. retail unit has performed “in line with our expectations” since the end of October. The group said it was benefiting from better relationships with third party brands, such as Nike, Adidas and Umbro, supply chain efficiencies and tight control of costs and stocks.

 

The group ended the period with net debt up 2.8% to £478.3 million but said it continued to operate well within its bank covenants.