Sports Direct International, boosted by strong holiday selling on improved margins, raised its profit guidance for the second time in two months. A U.K. regulatory group also provisionally cleared its acquisition of 31 JJB Sports stores.
Total sales for firm, which owns Sports World and Lillywhites stores as well as brands such as Everlast, Slazenger and Dunlop, rose 4.2% to £370 million ($370 million) in the 13 weeks to January 24, with gross profit ahead 7.7% to £154 million ($154 million). Retail sales increased 9.4%, but revenue in the brands division fell 22.8%, reflecting a long-term plan to grow the division’s higher margin licensing business.
Chief executive David Forsey said: “The board is pleased with the group’s trading performance for the quarter. The UK retail division continued to deliver strong results, particularly in online sales at Sportsdirect.com. where sales accounted for over 5% of the total UK revenue.” He also said trading since the end of the quarter had “remained encouraging” and he forecast year-end net debt no more than the half-year level of £362 million ($362 million).
Sports Direct said it now expects underlying earnings before interest, tax, depreciation and amortization (EBITDA) of at least £160 million ($160 million) for its year ended April 2010, up from previous guidance of at least £155 million ($155 million.) In the 2008-09 year the firm netted £136.8 million.
The Competition Commission also said it had provisionally cleared the acquisition by the firm of 31 stores from rival JJB Sports. The Office of Fair Trading referred the purchase to the Competition Commission in August, saying the company had failed to follow through on an offer to sell five of the stores to assuage competition concerns.
Commission deputy chairman Diana Guy said: “We have looked at whether consumers in the local areas concerned will be affected by these acquisitions and have provisionally concluded that they are unlikely to lose out. We do not believe there will be higher prices or a reduction in quality and choice for consumers.”
Sports Direct said it was “very pleased” with the decision: “The Competition Commission has confirmed in its provisional findings what we always knew †that the acquisition of these stores from JJB has not resulted and will not result in higher prices or a reduction in quality and choice for consumers.”
Probes by the Office of Fair Trading (OFT) and the Serious Fraud Office (SFO) into allegations of anti-competitive activities and fraud are continuing.
