Investors advised to ‘buy’ Sports Direct as it beats market expectations

Ian Forrest, investment research analyst at The Share Centre, explains what this means for investors.

“Sports Direct beat market expectations today reporting a 16% rise in underlying profits to £383.2m compared to previous guidance of between £360m and £380m. Overall sales rose 4.7% to £2.8bn with the main sports clothing business seeing like-for-like sales up 7.4% during the year. The company also announced it would be awarding around 5m shares to 2,000 staff members thanks to achieving a profit target established in 2011. Trading in May and June has also been in line with expectations, however Sports Direct lowered its forecast for underlying profits in the year to April 2016 from £480m to £420m as planned acquisitions have not happened as expected.   

“Sales through the group’s website rose 14% to £335.4m, boosted by the introduction of a “Click & Collect” service in the second half. These are good results and show the group is achieving healthy sales and profit growth despite some challenges such as unseasonal weather. We retain our “buy” recommendation as we expect further growth in the UK, helped by rising wage levels, further expansion into several European markets and the company’s focus on offering a wide variety of value products and new services.”