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Sports Direct on target for EBITDA as sales hold up

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Leading sporting goods retailer Sports Direct has reported a 0.8 per cent rise in retail sales for its last quarter of trading, it has been reported today.

Although retail gross profit declined 6.6 per cent to £156 million during the 13-week period ending July 25th 2011, this was a decent performance considering the same quarter last year saw a huge sales surge thanks to the 2010 football World Cup.

With total group sales up 0.5 per cent during the period, EBITDA is expected to reach its previously stated target once exceptions are removed.

Dave Forsey, CEO of Sports Direct, said: “The group’s underlying performance in the period has been in line with management expectations, while continuing to invest in margin, inventory and extra group marketing.

“Trading has continued to remain in line since the end of July and therefore the board is confident of reaching the full year targeted underlying EBITDA of £215 million (before the charge for the bonus share scheme).”

In July Sports Direct awarded a record bonus scheme to its employees, which will see participants receive 75 per cent of base pay in shares worth £1.25 each paid over a two-year period.

EBITDA will also be affected by the success of Darren Clarke at this year’s The Open Championship, because as sponsors of the sportsman the retailer paid out £2 million as bonus payment for him winning the international golfing event.

The impact of the World Cup on trading was demonstrated by the fall of 40.2 per cent in retail like-for-like gross contribution in one week alone over the affected period, but with brand gross profits remaining flat over the quarter and total gross profits down just 5.7 per cent the retailer appears to have weathered the storm well.

Upgrades to the group’s store portfolio continued since the spring, with nine core UK retail stores opened whilst four core outlets closed, although two of these were relocations.

Three non-core stores opened and four closed during the period in the this country, whilst one store in France, two in the Netherlands and one in Cyprus were also unveiled.

Published on Wednesday 07 September by Editorial Assistant

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