Sports Direct International, the UK’s leading sportswear retailer, raised its profit forecast by 7 per cent, giving a boost to its shares and those of rival JJB Sports.
In a trading statement, Sports Direct said sales in the 13 weeks to July 26 were £375m, up 10 per cent on the same period a year earlier, while gross profit was £157m, up from £150m.
Andrew Wade, an analyst at Numis Securities, estimated like-for-like sales growth in the UK may have approached 10 per cent or more, which he described as “an exceptional performance”. Numis is JJB’s broker.
Katharine Wynne of Investec Securities said the trading figures reflected stock shortages at JJB that were being addressed.
Sports Direct said it expected underlying earnings before interest, tax, depreciation and amortisation for the year to be at least £150m at current exchange rates. In July, it had predicted a figure of at least £140m, itself an increase on guidance given in April.
The group, controlled by Mike Ashley, said it was comfortable with its goal of cutting net debt to below £400m by the end of the financial year. It did not pay a final dividend last time, arguing that debt reduction was its priority.
Sports Direct shares, which slid to 31p last year, rose 13.4p to 130.1p on Wednesday. The company floated in 2007 at 300p a share. Shares in JJB rose 3¾p to 38¾p.
Sports Direct said it was continuing to co-operate with an inquiry into its acquisition of 31 stores from JJB. The Office of Fair Trading said the purchase created competition concerns in five local areas where Sports Direct already had a store.
After the company failed to meet a deadline to sell five stores to assuage these concerns, the OFT last month referred the matter to the Competition Commission.
Sports Direct is expected to benefit if the England football team qualifies for the World Cup finals next year in South Africa.
Analysts at Seymour Pierce estimated that qualification could bring in £40m-£50m of extra sales for the group from fans purchasing replica England kits. However, Investec argued that hopes of a profit bonanza were exaggerated.
