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Sports Direct defies UK retail downturn with earnings rise

Sports Direct defies UK retail downturn with earnings rise
FILE PHOTO: Mike Ashley, founder and majority shareholder of sportwear retailer Sports Direct, arrives at the company's AGM, at the company's headquarters in Shirebrook, Britain, September 7, 2016. REUTERS/Darren Staples/File Photo -
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Darren Staples(Reuters)
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LONDON (Reuters) – Sports Direct <SPD.L>, the British sportswear retailer controlled by Mike Ashley, reported a 15.5 percent rise in first-half core earnings, excluding acquisitions, helped by its strategy to move its brand upmarket.

The group, which purchased department store chain House of Fraser in August, said on Thursday it made underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 180.3 million pounds in the six months to Oct. 28.

Ashley said the performance was impressive in the context of the current struggles in the sector and showed its “elevation strategy continues to go from strength to strength.”

Some 61 percent of Sports Direct’s equity is owned by Ashley, its billionaire founder and chief executive, who also owns English Premier League football club Newcastle United.

He is smartening up its stores and selling more premium products from its four key suppliers – Nike <NKE.N>, Adidas <ADSGn.DE>, Puma <PUMG.DE> and Under Armour <UAA.N> – to better compete with rivals JD Sports <JD.L> and Decathlon.

The core business was on track to meet its target of growing earnings by 5-15 percent in the full year, it said, but it added that it expected the House of Fraser acquisition to result in a drop in full-year earnings.

Prior to Thursday’s results, analysts’ on average had expected 2018-19 core earnings to be 321.6 million pounds, according to Refinitiv data, versus 306.1 million pounds made in 2017-18.

(Reporting by Paul Sandle, editing by James Davey)

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