Sports Direct pre-tax profits plunge 73% despite core earnings uptick

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Sports Direct’s strategic investment in Debenhams has seen the retailer take a major hit in its full year pre-tax profits, although it recorded an uptick in group earnings and EBITDA.

According to its preliminary results for the period ending April 29, Sports Direct’s reported profit before tax plummeted 72.5 per cent year-on-year to £77.5 million, primarily because of a £85.4 million impact from its Debenhams holdings.

However, on an underlying basis, profit before tax surged 34.5 per cent to £152.9 million and underlying EBITDA grew 12.2 per cent to £306.1 million – which was better than the average City forecast of £296.8 million.

The sportswear retailer added that group earnings increased 3.5 per cent year-on-year to £3.4 billion, bolstered by a 42.7 per cent and 594.6 per cent increase in its premium lifestyle and rest-of-world retail divisions respectively.

However, core revenue from its UK sports retail and European sports retail divisions edged down by two per cent and 0.1 per cent respectively, while revenue from its wholesale and licensing division dropped 22.7 per cent.

Meanwhile, Sports Direct’s reported profit after tax nose dived by 88.1 per cent year-on-year to £27.6 million, but underlying profit after tax skyrocketed 57.7 per cent to £104.9 million.

The retailer said its results were up against tough comparatives, having seen profits jump a year earlier on the sale of its Dunlop business as well as its JD Sports shares.

“I am particularly pleased that Sports Direct has not only been named among the 10 companies with the most improved reputation in the UK, but also that we were ranked among the top five in an index of international retailers,” chief executive Mike Ashley said.

“I’m pleased that our underlying EBITDA has come in at the top end of our expected range at £306.1 million as we indicated this time last year, and also that the underlying profit after tax has increased substantially to £104.9 million.”

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