Management at the sportswear retailer said that the figures were in line with expectations, and that the apparent slowdown was the result of a strong comparative performance a year earlier, driven by the soccer World Cup. Management added that, with a highly incentivised workforce, it was also "very confident" of hitting its £215m cash profits target. A new scheme has been introduced for employees, as a well as another that will see £12m paid to 71 per cent shareholder and executive deputy chairman Mike Ashley in 2018, should a series of "stretch targets" be met.
The group also believes that it stands to benefit from the run-up to the Olympics and European Championships next year, and management is evaluating a number of investment opportunities which could accelerate growth, although have ruled out a takeover of ailing Blacks Leisure.
Broker Seymour Pierce expects full-year EPS of 17.9p (from 16.8p in 2011), although says the company has "a lot to make up in the second half".
| SPORTS DIRECT INTERNATIONAL (SPD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 198p | MARKET VALUE: | £ 1.14bn | |
| TOUCH: | 198-199p | 12-MONTH HIGH: | 270p | LOW: 142p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 13 | |
| NET ASSET VALUE: | 72p* | NET CASH: | 27% | |
| Half-year to 23 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 820 | 100 | 12.2 | nil |
| 2011 | 889 | 100 | 12.5 | nil |
| % change | +8 | - | +2 | - |
|
*Includes intangible assets of £217m or 38p a share |
||||
IC VIEW:
It's good to see that staff at Sports Direct are well-motivated, and it looks well positioned to capitalise on what should be a promising year for sportswear sales. We'd be looking to buy if the shares come under further pressure but, in light of the challenging consumer backdrop, they're currently fairly priced.
Last IC View: Fairly priced, 198p, 21 July 2011
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