Ashley shoots for £12m Sports Direct bonus

Sports Direct International founder Mike Ashley is in line to receive a one-off bonus of 6m shares if the sportswear retailer hits a challenging series of earnings targets over the next four years.

Mr Ashley, who also owns Newcastle United football club, does not receive any remuneration from Sports Direct in his role as executive deputy chairman, and his potential bonus would be worth almost £12m at the group’s current share price.

He already owns 71 per cent of Sports Direct’s shares, and will receive the 6m shares if the retailer hits a series of targets on earnings before interest, tax and depreciation, rising from £225m in 2012 up to £325m in 2015. Shareholders will vote on the incentive plan next September.

Announced in tandem with the retailer’s half-year results, Sports Direct’s confidence forms a stark contrast with the unfolding crisis on UK high streets. Reporting an 8.4 per cent increase in interim revenues to £888.6m in the six months to October 23, this was achieved despite the impact of warmer weather, and the World Cup boosting sales by £20m in the comparable period last year.

“Literally every other retailer that we have heard from in the second calendar half of 2011 has been cautious or bearish,” said Jonathan Pritchard, retail analyst at Oriel Securities. “It is refreshing to hear such bullishness, and we consider the targets achievable.”

“We’ve always offered value and these troubled times obviously play to the strength of our brand,” said Dave Forsey, chief executive. “We think we’ve got a great summer ahead with the European Championships and the London Olympics.”

Although interim pre-tax profit was flat at £100m, online sales grew 85 per cent year-on-year to £72m, and now account for nearly 10 per cent of group sales. The company plans to more than double the size of its existing distribution facility in Shirebrook to handle future demand.

Last week, it proposed a joint venture with struggling Blacks Leisure that would see the two retailers share a distribution facility. The biggest shareholder in Blacks, which put itself up for sale last week, Sports Direct announced it was contemplating a cash offer for the chain on Tuesday.

With £71m cash on its balance sheet, Sports Direct has the financial firepower for a deal, but analysts speculate it could falter if key outdoor brands express opposition, recalling a failed takeover attempt last year.

Sports Direct has since moved into “premium lifestyle fashion” through the £7m July acquisition of a majority stake in designer retailers USC and Cruise from entrepreneur Sir Tom Hunter’s West Coast Capital.

Shares in Sports Direct fell by 9.5p to close at 190p, a fall of nearly 5 per cent.

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