Sports Direct reported revenue increased 10.2 percent in its fiscal year ended April 28, but were down 1.9 percent excluding acquisitions and on a currency-neutral basis.

Group revenue reached £3.36 billion, which includes a part-year contribution from the acquired businesses in the period, the largest being the House of Fraser acquisition made in August 2018. Other acquisitions included Evans Cycles and Sofa.com.

Underlying EBITDA increased 10.9 percent excluding the impact of House of Fraser which is consistent with the outlook statement made by Chief Executive, Mike Ashley last year. Including House of Fraser and other acquisitions, underlying EBITDA was £287.8 million compared to £306.1 million last year, a decline of 6.0 percent.

Profit before taxation rose 193.3 percent, to £179.2 million from £61.1 million. The improvement was predominantly due to improved outcomes on foreign exchange financial instruments and the non-recurrence of investment write-downs, such as on Debenhams where in FY18 the loss totaled £85.4 million.

FY19 underlying profit before tax was up 5.0 percent to £143.3 million, which was largely due to the non-reoccurrence of investment write-downs being counteracted by the overall result of the Group being down year on year, primarily due to the results from House of Fraser since acquisition.

Other revenue highlights include:

  • UK Sports Retail revenue increased by 0.3 percent. Excluding acquisitions, revenue decreased 2.9 percent. UK Sports Retail like-for-like stores gross contribution was down 1.6 percent.
  • European Sports Retail revenue decreased by 5.9 percent. Currency neutral revenue decreased by 5.5 percent. European Sports Retail like-for-like stores gross contribution was up 0.9 percent.
  • Premium Lifestyle Retail revenue increased by 26.3 percent, due to an increased store portfolio and online sales.

Sports Direct’s statement notes that Rest of World Retail sales, which includes Bob’s Stores and Eastern Mountain Sports in the U.S. as well as stores in Malaysia, were £215.9 million for the year, up from £192.4 million a year ago. Gross margin was 40.2 percent, up from 30.0 percent in the prior year. Underlying EBITDA loss was £0.9 million, improved from a loss of £22.3 million in FY18. The improvements are due to prior year acquisition accounting for Bob’s Stores and Eastern Mountain Sports, and prior-year increased inventory provisions.

There are currently 51 stores in the US. In Malaysia, the Group has 33 stores which are 51.0 percent owned by the Group.

David Daly, non-executive chair, said in its annual statement, “Undoubtedly the High Street is undergoing some significant changes not helped by the uncertainty the population is experiencing in relation to Brexit, the current political upheaval, and the wider economic outlook. We remain focused, however, on delivering the elevation strategy. We are excited by the opportunities ahead but also cautious as we realize that shaping House of Fraser into what we want it to be after years of underinvestment and poor management will take time.”

Photo courtesy Sports Direct