Sports Direct delivered a typically convoluted set of results with pre-tax profits massively inflated by £37m in currency hedging gains and claims for £23.2m of assets tied up in collapsed Icelandic bank Kaupthing, Singer Friedlander. A fall in operating profits of 14 per cent to £58m give a more accurate picture of the tough conditions on the UK high street, while there's wasn't even a windfall from the World Cup after England's early exit and the team's failure meant the impact of clearing excess stock will cancel out some pre-tournament gains. Still, investors can take some heart from a bigger than expected 28 per cent fall in net debt to £312m.
The financials are usually a sideshow at Sports Direct, but group margin was only 20 basis lower at 40.6 per cent because of better average margins in the second half. UK retail sales generated revenues 11 per cent higher at £1.11bn, or up 3.4 per cent on a like-for-like basis. The smaller international retail division posted underlying sales 11 per cent higher at £120m. However, the brands division saw sales fall 17.4 per cent to £190m as a result of a switch moved to licensing products, rather than wholesaling.
Broker Investec Securities forecasts pre-tax profits of £113m and EPS of 13.3p (2010: £102m/12.4p).
SPORTS DIRECT (SPD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 113p | MARKET VALUE: | £651m | |
| TOUCH: | 113-114p | 12-MONTH HIGH: | 134p | LOW: 82p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 7 | |
| NET ASSET VALUE: | 45p* | NET DEBT: | 120% | |
| Year to 25 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 1.19 | 96.3 | 15.3 | nil |
| 2007 | 1.35 | 60.5 | 8.2 | 1.03 |
| 2008 | 1.26 | 119.0 | 12.2 | 4.50 |
| 2009** | 1.36 | 10.6 | -2.8 | 1.22 |
| 2010 | 1.45 | 119.5 | 15.7 | nil |
| % change | +7 | +1,032 | - | -100 |
*Includes intangible assets of £217m, or 37p a share | ||||
