Sports Direct: small growth and big controversy

Amidst concern over its treatment of employees, Sports Direct has revealed positive interim results, catalysed by the “good performance” of its staff.

Revenue at the sporting goods retailer increased by 2.5% on a currency neutral basis, with gross profit rising 5.2%. Net debt decreased to £20.3m from £59.7m at the start of April this year, and the brand has continued to roll out “large format city centre stores”, increasing its UK store portfolio by 15.

“The Group has delivered another excellent set of results particularly given the strong comparable sales generated in the build up to the FIFA 2014 World Cup and after a generally mixed summer for the retail sector,” said Chief Executive, Dave Forsey.

“Within sports retail our commitment to upgrading our store portfolio continues to deliver gross margin growth and is a significant contributor to our strong EBITDA results. We continue to innovate, refine and improve our customer proposition. In line with this strategy, during the period we opened new larger format stores in Leeds and Plymouth and combined gym and retail spaces in St Helens and Newport.

Trading since the period end has been in line with management‘s expectations and, while we retain the ability to invest in margin, inventory and group marketing to deliver long-term sustainable growth, we remain confident of achieving the 2015 Share Scheme‘s revised underlying EBITDA target of £420m.”

This ‘Share Scheme‘ is a policy which rewards participating employees with company shares. The report also made it “clear” that “no warehouse workers are on ‘zero hours‘ contracts, and all have contracted hours with the agencies…We comply fully with all applicable legal requirements and will continue to keep these under review.”

This statement is likely intended to reassure spectators and, more importantly, investors after the recent investigation into Sports Direct by The Guardian. The national found that warehouse staff were spending unpaid time after the end of their shift waiting for compulsory searches, and that pay could be deducted for checking in even a minute late, regardless of the worker having arrived on time. Reportedly many workers, primarily temporary staff, are effectively paid below minimum wage.

Sports Direct declined to comment yesterday, although cited that the report contained a “number of issues.”

“We look forward to 2016 with confidence ahead of the Olympic Games in Rio de Janeiro and the 2016 European Football Championships in which England, Wales, Northern Ireland and the Republic of Ireland will be competing,” Forsey added.


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