Pre-tax profits at Sports Direct have been hit by unfavourable exchange rates, falling 40.8% to £57.8m in the 26 weeks to October 25.
Profits however beat many analyst expectations and the fall came despite strong UK retail sales which grew 14.9% in the period to £588m. Group revenues grew 10.1% to £756.9m with a strong performance for its international retail business which was up 22.8%, with underlying EBITDA for that part of the business up 20%.
Sports Direct chief executive Dave Forsey said: “We are pleased with our performance in the first half of this year, when conditions remained challenging.”
He added: “Although the operating environment is likely to remain difficult; we have motivated colleagues, a fantastic unrivalled range of products for our customers, and the World Cup to look forward to. On that basis, and assuming stable exchange rates, we are confident in the full year outlook for the group and expect to achieve underlying EBITDA, of at least £155 million this financial year.”
Sales at the sports specialist’s brand division struggled on the back of poorer wholesale revenues and it said it was now looking to focus on higher-margin licensing. Revenues for the brand division were down 19.3% to £95.1m.
Sports Direct said that it was ahead of schedule in its target to reduce debt levels to below £400m by April 2010. It said in its last half it has already reduced debt to £362m.
The sports retailer, which operates 371 stores in the UK, last month hired a new chairman – former police chief Keith Hellawell.
It is expected that Hellawell will play a key role in helping steer the retailer through ongoing investigations into the company by the Competition Commission, the Office of Fair Trading and the Serious Fraud Office.