Sports products & clothing retailer Sports Direct has announced today a rise in sales and profits over the early part of 2012 and is now confident of reaching year-end targets.
As a consequence the retailer will now propose to shareholders at its AGM this summer that Chairman & majority shareholder Mike Ashley be awarded a bonus of eight million shares on the condition of specific EBITDA & net debt levels being achieved over the next three years.
In the nine weeks to March 25th 2012 total group sales at Sports Direct rose 13.2 per cent year-on-year to £267.6 million, while gross profit increased by 13.5 per cent to £99.8 million.
The company’s retail division performed particularly well over the period with a gross profit of £85.4 million, up from £74.2 million for the same period last year, while sales in the division grew 16.1 per cent .
Dave Forsey, CEO of Sports Direct, commented: “The Group has continued to deliver strong growth during February and March, outperforming management’s expectations.
“This performance continues to be primarily through the UK division where online sales now represent an even larger proportion of our total retail sales than envisaged at our interim results in December 2011.”
Sports Direct is now “certain” of reaching its full-year target for underlying EBITDA of £215 million and its ‘super stretch’ scheme target of £225 million.
The proposed share payout to Ashley will depend on EBITDA rising to £270 million in 2013, climbing again to £290 million in 2014 and reaching £340 million in 2015, while the company’s generous employee bonus scheme will have to meet consecutive targets of £250 million, £260 million and £300 million over the same three financial years.
Joseph Robinson, Senior Consultant at retail analyst firm Conlumino, said that Sports Direct deserves the success it is now experiencing due to its wise investment in sportswear brands in recent years and “getting the basics of the business right”.
“Perhaps the predominant driver of Sports Direct’s performance of the last couple years has been its ability to foster a dynamic and emotionally-engaged workforce through a generous employee bonus scheme,” Robinson said.
“The retailer’s plan to extend this scheme reflects the importance of this factor is its recent success.
“The announcement of a new “super-stretch” scheme for Executive Deputy Chairman, Mike Ashley, runs contrary to current corporate sentiment. However, it would be difficult to begrudge the scheme’s rewards were the retailer to hit its ambitious EBIDTA targets up until 2015.”