Sports Direct International Plc, the largest sporting goods retailer in the U.K., posted a 7.4% increase in first half earnings and said it was on track to meet market expectations for the full-year. However the retailer cut its interim dividend payout by 41% to 1.22 pence.
“With the economic situation and trading environment likely to remain extremely difficult, our back to basics strategy is working for us,” said CEO Dave Forsey in a statement. He said their board remains comfortable with underlying EBITDA expectations of £135 million ($210.2 mm) for the full year to end-April 2009.
In the six months ended October 26, underlying EBITDA reached £89.8 million ($114.1 mm), up from £83.6 million ($106.2 mm) in H1 last year. Most of the increase resulted from gains related to currency swings.
The September 2007 acquisition of Everlast drove brand revenues for Sports Direct up 34% for the first half. Likewise, licensing revenues have grown 20% and the company identified several marketing initiatives for the brand, including agreements with boxers and cage fighters and with famed heavyweight champion Muhammad Ali in connection with the brands 100-year anniversary.
Sports Direct, which owns brands such as Slazenger, Lonsdale, Everlast and Dunlop, said group revenue was up 2.9% at £687.7 million ($873.6 mm)
A 1.8% drop in retailing revenue was more than offset by growth in wholesale and licensing income. Gross margins increased 10 basis points to 43.4% of sales.
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.