Sports Direct share price: Group to post strong final results

Sports Direct’s (LON:SPD) shares have been in favour this week as the UK’s largest sportswear retailer prepares to report a strong full-year performance on Thursday.

The retailer, controlled by Newcastle United owner Mike Ashley, said in a trading update in May that it expected to beat expectations of a 23 percent rise in annual pre-tax profits to £295 million. It also said underlying earnings would be in line with forecasts for £380 million, which will trigger a multi-million pound share payout in September under the group’s staff bonus scheme.
According to analysts, Sports Direct will this week demonstrate further confidence about the strength of its UK market, but its European operations may underperform after sales of winter ski clothes were hit by a mild spring. Librium sees the group’s annual profit coming in at £300 million, up from £239 million the previous year. The broker added that the chain, which has over 600 stores in Europe, including 400 in the UK, had strong relationships with key sports goods suppliers, which put it in a good position to grow margins. Further, the analysts forecast that Sports Direct will have amassed £500 million of net cash by 2017, which would give it the strength to continue its European expansion.
Although in good financial health, Sports Direct is expected to be one of the most affected by the latest UK Budget statement. Chancellor George Osborne announced last week that the minimum wage, now £6.50 an hour, would be recast as the national living wage and rise next year to £7.20 for people over 25 followed by further increases to £9 by 2020. Sports Direct employs around 15,000 part-time staff on zero-hour contracts and will face higher costs as a result of the changes.
As of 13:26 BST, Sports Direct’s share price was unchanged at 736.00p, maintaining gains from the previous two sessions. Since Friday, the FTSE 100-listed company has gained almost four percent.
As of 14:01 BST, Tuesday, 14 July, Sports Direct International Plc share price is 735.50p.

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