Sports Direct International Plc Reveals Sales Up 18%

Sports Direct International Plc (LON: SPD) says trading has been ahead of expectations.

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The shares of Sports Direct International (LSE: SPD) rallied 12p to 727p during early trade this morning after the retail chain said its total sales for the 13 weeks to 28 July had improved by 18% to £613m.

The FTSE 250 member, which operates around 400 stores across the UK and owns brands such as Dunlop and Everlast, added that gross profit for the same period climbed 23% to £260m.

The retailer confirmed its main Sports Retail operation had seen sales improve almost 15%, with sales rising 98% in the smaller Premium Lifestyle division and sales up 4% in the Brands subsidiary.

Dave Forsey, Sports Direct’s chief executive, said:

As we highlighted at our Preliminary Results in July, the Group has experienced a strong start to the year with trading ahead of management’s expectations.” 

This performance is in part attributable to the historic investment in gross margin; the on-going investment in product range and availability; and continued optimisation of our online and in-store product offer.

Mr Forsey added that the retailer continued “to target an internal stretch underlying EBITDA target” of £310m.

Prior to today, City experts had been expecting Sports Direct to deliver current-year earnings up 13% to 30.3p per share and reintroduce a dividend of 10p per share.

Following this morning’s market reaction, Sports Direct’s shares may trade on a possible P/E of 24 and yield a potential 1.4%.

Of course, whether that valuation, today’s statement and the general outlook for selling cheap tracksuits all combine to make Sports Direct a ‘buy’ right now is something only you can decide.

But if you currently own Sports Direct shares and are looking for another high-quality growth opportunity, the Fool’s smartest analysts have named one company they believe will bring you superior capital gains…

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> Maynard does not own any share mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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