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