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Sports Direct Gains as Sales Accelerate on New Brands, Web
Sports Direct International Plc (SPD), the U.K.’s biggest sporting-goods retailer, gained the most in four months in London trading after revenue rose more than analysts expected on premium lifestyle products and online sales.
Sales for the 13 weeks ended Jan. 27 advanced 21 percent to 589.5 million pounds ($895.7 million), the Mansfield, England- based retailer said today in a statement. That was more than the median estimate of 12 percent growth, according to data compiled by Bloomberg. The stock rose as much as 7 percent.
The 400-store U.K chain, which sells brands like Dunlop, Slazenger and Lonsdale at discounted prices, said it is “certain” it will reach a full-year profit target for underlying earnings before interest, taxes, depreciation and amortization of 270 million pounds. The retailer has added brands to its premium division, like the purchase of Flannels Group last year, and is extending its distribution center to account for growing e-commerce demand.
“The investment in stock and continued improvements online are two of the reasons why Sports Direct’s sales growth is, once again, miles above expectations,” said Jonathan Pritchard, an analyst at Oriel Securities who recommends buying the shares. “The move towards emphasizing ’good, better, best’ product is working, as shoppers are trading up.”
The stock rose as high as 444.9 pence for the biggest gain in intraday trading since Oct. 4. It was up 4.4 percent at 9:03 a.m., extending the advance this year to 12 percent.
“The group’s strong performance continued during the third quarter, primarily driven by our Sports Retail division, including online,” Chief Executive Officer Dave Forsey said in the statement.
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