Sports Direct International Plc Reports Profits Up 17% And Ahead Of Expectations

Yet the half-year results from Sports Direct International (LON: SPD) still show no sign of a dividend.

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The shares of Sports Direct (LSE: SPD) dived 39p lower to 732p during early trade this morning despite the retailer saying its underlying first-half profits had advanced 18%.

The FTSE 100 member confirmed profits before tax had improved from £125m to £146m after group revenues jumped 24% to £1,345m. The figures were ahead of the management’s expectations.

Sports Direct said its core UK chain saw sales advance 13% and that its overseas operations witnessed sales soar 31%. The Premium Lifestyle division reported turnover up 83% while acquisitions contributed sales of almost £90m.

Online sales grew 43% and contributed to almost 16% of the top line.

Sports Direct added that gross margins improved by 190 basis points while free cash flow was £147m.

However, the retailer did not declare a dividend as it declared itself to be a “growth company” and felt it was “appropriate to preserve the Group’s financial flexibility… while evaluating attractive investment opportunities“.

Dave Forsey, the chief executive of Sports Direct, said:

While we retain the ability to invest in margin, inventory and Group marketing to deliver long-term sustainable growth, the Board is confident of achieving at least our full year internal underlying EBITDA target of £310m, before the charge for the Employee Bonus Share Scheme.

Prior to today, City experts were expecting Sports Direct to report earnings up 15% to 31p per share for the twelve months to April 2014.

Following this morning’s price reaction, the shares may therefore trade on a possible P/E of 24.

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.

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

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