Sports Direct share price slides despite solid final results

on Jul 16, 2015
Updated: Oct 21, 2019

Sports Direct’s (LON:SPD) share price opened lower this morning, after the UK’s largest sportswear retailer reported a solid set of results, but warned that challenging conditions might hinder future performance.

The company, controlled by Newcastle United owner Mike Ashley, said in a statement today that in the year ended April 26, total sales had risen 4.7 percent to £2.8 billion, while pre-tax profits had jumped 31 percent to £313 million, driven by continued expansion in the UK and across Europe. Sports Direct also revealed that about 2,000 staff are in line for a slice of bonus share awards totalling about £36.7 million after the group met its earnings targets set down in 2011.
“Trading since the period end has been in line with management expectations and will continue to be driven by improvements in product range and availability, optimisation of both our in-store and web offerings, the introduction of Click and Collect in the UK and further investment in our store portfolio,” CEO Dave Forsey said.
In spite of the robust performance, Sports Direct’s board lowered its guidance, revising its 2015/16 adjusted core earnings from £480 million to £420 million, as it now considered it to be unreasonably challenging after failing to fuel its expansion with acquisitions over the past year. All other targets for the further three years of the scheme to 2019 remained unchanged.
Sports Direct also revealed that it would not pay a dividend for the year and said it was in the best interests of the group and its shareholders to preserve financial flexibility, facilitating the pursuit of potential acquisitions and other growth opportunities.
In response to criticism it has received regarding its use of controversial zero-hour contracts, Sports Direct added that it fully complied with all legal requirements relating to casual workers, including sick pay, holiday pay and freedom to seek other employment.
Sports Directs share price dipped into the red following today’s final results announcement. By 08:13 BST, the stock had fallen 1.83 percent to stand at 721.00p.
As of 09:01 BST, Thursday, 16 July, Sports Direct International Plc share price is 723.50p.

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