Sports Direct lost out on sales and potential profits after being left with excess stock following England’s early exit from the World Cup.
The retailer, founded by tycoon Mike Ashley, said it is still confident of achieving EBITDA of £195m in the current financial year.
Investec analyst Katharine Wynne said: “The World Cup was hoped to increase profit by £30m within the full-year 2011 estimate of £195m. In the event it has probably come in £10m shy of estimates, with sales falling away even before England’s ignominious exit.”
Sports Direct had bought stock in the expectation that England would make at least the quarter finals of the tournament, but the squad’s failure to do that, and its disappointing performance generally, hit sales.
Some analysts believe Sports Direct is making strides. Oriel analyst Jonathan Pritchard said that the retailer is still “evolving both in terms of its customer offer and attractiveness as an investment”.
He said: “Management is seeking to move the core brand away from a purely price-led offering towards a service-driven, higher quality proposition, and we believe that this will lead to a strong and substantial growth profile.”
In its full year to April 25 Sports Direct reported group sales up 6.3% to £1.5bn and underlying pre-tax profits up 50% to £119.5m.
Chief executive Dave Forsey said international remained an attractive growth avenue. Sales at the international retail arm rose 17.2% to £120m in the year and the group recently opened its first French store in Paris. Forsey said he continues to look for new territories to add to its 65-store international portfolio.
Forsey also said that the group remains acquisitive - it pulled out of a bid to buy outdoor retailer Blacks Leisure in April after concerns over suppliers - but a priority is to continue to reducing net debt, which was cut by 27.7% to £311.9m last year.
Forsey said that trading conditions continue to be “tough” but was “confident initiatives taken across the group will put us in a strong position for the next stage of our growth”.
One such initiative, which has helped control costs, is temporary shops taken on short leases to test demand in certain areas.
Sports Direct also said that its
first ever TV campaign helped online sales, which now account for 4.5% of total UK sales, up from 1.5% last year.