The owner of House of Fraser and Sports Direct raised the bottom-end of guidance and said the group will achieve a 20% to 30% improvement in underlying earnings (EBITDA) in the year to next April.
Boss Mike Ashley also put out a statement where the company said it “continues to strengthen relationships with key suppliers” and said its “aim is to become, in the minds of consumers, partners and suppliers, the number one sporting goods retailer in Europe”.
In the 26 weeks to October 26, revenue dipped 7% to £1.8bn with EBITDA up 25% to £226mln. Gross margin was 44%, up from 43.8% a year ago.
Sales in UK sports retail, European retail and rest of the world fell by 10%, 4% and 16% due to stores closures and the impact of COVID-19.
Wholesale and licensing was down 21% but sales for the premium lifestyle segment rose 5% due to new Flannels stores, increased web sales, and a full period of the prior year acquisitions of Jack Wills and Sofa.com.
The Flannels stores, alongside growth in the online business and cost savings, pushed EBITDA up.
Net debt was cut to £250mln from £366mln last April. The board did not propose a dividend.
Analysts at Peel Hunt said the FTSE 250 group “is doing plenty right and should just focus on the core business but that is not its style”.
“The relationship with Nike is said never to have been stronger, but management accepts proof of this will take time to emerge outside the handful of megastores,” they commented.
“The shares are not cheap enough for us to take it on trust, quite the opposite”
The shares rose 15% to 503p in early trading then trimmed their gains in the afternoon, rising 12% to 491p.
–Adds analyst comment, shares–