Sports Direct International Plc Upbeat On Future Earnings

Sports Direct International Plc (LON: SPD) should meet earnings expectations after posting a 15% profit increase.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 19 February, 2014 9:50 am GMT

| More on: FRAS

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The share price of Sports Direct (LSE: SPD) increased by 4% to 744p during early trade this morning after the sporting goods retailer posted a nearly 15% profit increase for its third quarter, boosted by strong online performance. The group is confident of meeting its full-year earnings target of £310m.

The firm, with approximately 400 stores in the UK, saw profits rise to £281m, up from £245m over the same period a year earlier.

Total sales saw an 11% increase to £655m, while sales in the sports retail business increased 7% to £539m. Elsewhere, sales in the the premium lifestyle division, which includes fashion outlets USC, Cruise and Van Mildert, surged over 50% to £71m.

The chief executive, Dave Forsey, commented:

“Despite tougher comparisons during the period, Sports Retail continues to perform well driven by our on-going focus on exceptional quality, unbeatable value and availability. Online also performed strongly with non-UK online gross profit contribution expected to be greater than the UK equivalent by the end of this financial year.”

Before today, analysts were predicting that Sports Direct’s annual results would reveal earnings per share of 36p. With a market cap of £4.5bn, shares in Sports Direct trade at 21 times earnings.

Of course, the decision to ‘buy’ — based on those ratings, today’s results, and the wider prospects of the retail sector — is solely your own decision.