20 Jul Sports Direct Profits Drop More Than Half
Sports Direct reported earnings tumbled 58.7 percent in its year ended April 30. The U.K. sporting goods chain blamed the devaluation of the pound against the U.S. dollar.
Earnings reached £113.7 million, down from £275.2 million. Underlying EBITDA reached £272.7 versus £381.4 , a decline of 28.5 percent.
Gross margins eroded 320 basis points to 41.0 percent.
Total revenue increased 11.7 percent to £3.25 billion from £2.9 billion.
In its core U.K. Sports Retail segment, revenues were £2.14 billion against £2 billion, a drop of 6.3 percent. Excluding acquisitions and 53rd week, revenue increased 2.6 percent. U.K. Sports Retail like-for-like stores gross contribution was up 0.3 percent.
International Sports Retail ‘s sales jumped 38 percent to £665.6 million from £482.3 million. Currency neutral, excluding acquisitions and 53rd week, revenue increased by 5.9 percent. International Sports Retail like-for-like stores gross contribution was down 0.8 percent.
In its Premium Lifestyle segment, sales rose 11.6 percent to £202.2 million from £181.2 million. Results include its premium and lifestyle retail businesses such as USC, Cruise and Flannels.
In its Brands segment, sales were £241.1 million against £231.5, an increase of 4.1 percent. The segment includes Everlast, Lonsdale and Slazenger.
Mike Ashley, chief executive, said: “Sports Direct is on course to become the “Selfridges” of sport by migrating to a new generation of stores to showcase the very best products from our third party brand partners. We have invested over £300m in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations. We will continue to invest and make decisions for the long term, whilst trying to conservatively manage the currency volatility that is reflected in our full year results. As previously announced, the devaluation of Sterling against the U.S. dollar has led to a significant impact on EBITDA and profits in fiscal year 2017. We have put in place hedging arrangements to minimize the short-term impact of currency volatility, but like many U.K. retailers we remain exposed to medium / long term currency fluctuations. Our results were also impacted by provisions and depreciation charges. I would like to thank all our people at Sports Direct for ensuring that we continue to move forward together whilst elevating our retail proposition.”