Sports Direct this week said its focus on the high street had paid off with a “spectacular trading performance” in the first half of its financial year.
The multichannel retailer, a Top50 trader in IRUK Top500 research, reported group revenue of £1.7bn in the six months to October 29, up by 4.7% on the same time last year. Within that, UK sports retail sales of £1.14bn were 1% down on last time. Sports Direct said this reflected a strategy of reducing online discounting and of closing stores as part of its focus on flagship high street stores. Up to 20 new flagship stores are set to open next year.
Net debt also grew as a result of the investment in the high street and in strategic relationships. Premium lifestyle sales grow by 65.5% in the half-year. International sports retail store sales of £343.5m were 4% up on last time, while pre-tax profits of £88m were 22.9% up on last time.
Mike Ashley, chief executive of Sports Direct International [IRDX RSDI], said: “Our high street elevation strategy is currently delivering spectacular trading performance within our flagship stores. We intend to open between 10 and 20 new flagship stores next year.
“Whilst our reported profit before tax has been impacted by fair value adjustments and transitional factors such as the disposal of assets in FY17; our underlying profit before tax remains healthy. We will continue to invest for the long-term and our net debt has increased in line with management expectations.
“We continue to anticipate that growth in underlying EBITDA during FY18 will be within our forecast range of 5% to 15%.”
• Meanwhile, Ocado [IRDX ROCA], a Top50 retailer, said revenue from retail sales reached £373.8m in the 14 weeks to December 3, up by 11.6% in the 14 weeks to December 3. Average order sizes remained stable at £106.11, 0.3% up from £105.83 last time, as inflation rose. Orders were placed more frequently by a growing number of Ocado Smart Pass – charging a flat monthly fee for deliveries – holders, with average weekly orders rising 11.1% to 280,000. Orders handled by its Andover customer fulfilment centre grew by 50% since the beginning of its latest financial quarter.
The 14 weeks also saw Ocado Solutions announce a new partnership with European customer Groupe Casino.
Chief executive Tim Steiner said: “We are delighted that Groupe Casino chose to partner with Ocado Solutions to develop its online food business and we remain confident in our ability to sign more deals such as this in the medium term. We are also encouraged by the progress we have made ramping up capacity at our revolutionary customer fulfilment centre in Andover which has supported further growth in our retail business in the UK. Over the last few weeks, we have processed over 50% more orders per week through the Andover facility compared to the beginning of the period. We are making good progress with the resiliency issues we highlighted with the third quarter results and although there is still work to do we are on track with our plans.
“While we continue to report sector leading double digit sales growth in our retail business, a shortage of capacity, with the lack of drivers in certain locations being the largest factor, restricted our sales growth. While this driver shortage has now been largely resolved, there was some short term impact on average orders per week over the period.
“We continue to work towards the opening of our fourth CFC, in Erith, South East London, in 2018. At scale, Erith will be able to process an additional 200,000 orders per week. Building scale and capacity in the UK will support the sustainable growth of our retail business, enabling us to take further market share in online grocery, and we look forward to the coming year with confidence.”
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