City confidence that Sports Direct will achieving its £215m EBITDA target in 2012 rose following a 7.3% jump in gross profits despite tough trading conditions.
Broker Numis raised its target price to 200p following Sports Direct’s pre-close update showing a 7.3% rise in gross profits to £88m in the nine weeks to March 27, when group sales rose 10.3% to £236m.
The retailer is to extend its bonus share scheme, which it said was a “significant contributor” to its sales and earnings rise.
Analysts said that Sports Direct’s retail sales growth slowed marginally from the third quarter.
Retail sales rose 12.4%, which broker Numis said implied a like-for-like performance of 8% to 9%. However, margins were down by 120 basis points due to increased promotions and rising production costs.
The retailer expects underlying EBITDA this year to be at least £205m, excluding the cost of the bonus share scheme.