Ahead of today’s update, the City worried that cracks were appearing in Sports Direct’s edifice, but they have been smoothed over.

Mike Ashley hasn’t had great press in recent days, what with the news that he’s been called before a Parliamentary Committee to explain exactly what happened with the administration of the USC fashion chain last month.

And there was the news that Sports Direct has parted company with its M&A/strategy director, Jeff Blue, and still hasn’t got a finance director.

Industry gossip also persists that Mike Ashley has fallen out with the Scottish retail entrepreneur Tom Hunter over the fact that his big bet on a taking a minority stake in House of Fraser went wrong.

And the Sports Direct share price has been drifting down ominously on worries that recent trading has been rather sluggish.

It has, in fact, been a while since Sports Direct said anything about current trading.

There was no post-Christmas update and the last outing for the management was with the interims back on December 11, so today’s update for the 13 weeks to January 25 was bound to be revealing.

The news today was, on the face of it, reassuring: despite weak-looking 2.6% sales growth in the quarter, management are still “very confident” of hitting the target of £360m underlying EBITDA for the April year-end.

That is below the City consensus forecast of about £380m, but chief executive Dave Forsey joked with analysts on the conference call that at this point a year ago Sports Direct were “very confident” of making £310m EBITDA and then reported £331m with the final results in July last year, so they know how the game is played.

The fact is that although sales may have been sluggish (not helped by a forex translation headwind of just over 1%) Sports Direct is bottom-line focused and it has been doing a good job of increasing gross margins, with gross margins in the core sports retail division (which accounts for well over 80% of the group total) up by more than 280bps in the period.

Another example of the bottom-line focus of Sports Direct is that the “click and collect” service launched in the UK last month is not free: the customer is charged £3.99, to cover the cost of handling and storage etc, albeit they also get a £5 voucher to spend.

Sports Direct’s reluctance to chase unprofitable sales is also seen in the slowing of online sales growth to “only” 10%-15%.

Sports Direct has not split out online versus store sales performance in the thrd-quarter period, nor did it split the UK from Europe, but Dave Forsey seems happy with the progress with integrating the recently acquired business in Austria, despite the fact that “a weak winter sports season across Europe has proved challenging”.

The premium lifestyle division continues to struggle as Sports Direct sheds unprofitable stores, but the City seems happy that the losses there are under control.

So, as the 2014/15 year nears its end, it looks as if Sports Direct will make £380m EBITDA.

But the internal target for the next year is as much as £480m and it is not clear where that is coming from at this stage.

Mike Ashley dropped a heavy hint back in December that more acquisitions were required to get profits moving forward, not least as his dream of acquiring House of Fraser was dashed.

So Dave Forsey made a point today of emphasising that management have plenty of contacts and discussions going on and that Jeff Blue’s departure was not a concern.

But if M&A is the name of the game for 2015/16 it remains to be seen what Mike Ashley has in mind, having ruled out a bid for Debenhams.

No doubt the great man has something up his sleeve.

  • Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos Retail Think-Tank.