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Sports Direct shares drop on profits news

Article By: ,  Financial Analyst
December 12, 2013 4:15 PM

The share price of Sports Direct has nosedived today (December 12th), after the company posted its latest financial results and they did not meet analysts' expectations.

Although the company stated that performance was in excess of the predictions of its management team, investors did not agree with that assessment and stocks in the firm dropped by almost ten per cent.

Sports Direct announced that its group revenues were up by 23.5 per cent, while the group underlying EBITDA saw a 12.3 per cent rise. Group gross profit also increased – by 29.2 per cent to £579.8 million – but the growth of the company appears to be slowing.

It is only a few weeks since Sports Direct was added to the prestigious FTSE 100 in London, a move that confirmed its expansion into one of the top sports and clothing brands in the UK. The company's majority shareholder is Mike Ashley, who also owns Newcastle United Football Club.

Growth online

Online sales were one of the areas where the firm made strong progress for the 26 weeks to October 27th 2013, with growth of 43 per cent recorded in the financial results. It was revealed by the company that online sales now contribute 15.5 per cent of total sports retail sale.

Chief executive of Sports Direct Dave Forsey stated that the firm has delivered "another strong performance" for the half-year. He stated that the company's continued focus on providing customers with "exceptional quality and unbeatable value" has reinforced its position as "the consumer champion".

He said: "The group's expansion in Europe has also continued with acquisitions in Austria and the Baltic states.  The integration of these acquisitions is progressing and we continue to look for further opportunities across Europe."

Despite the bullish comments of the Sports Direct chief executive, its share price was down by more than nine per cent by 14:12 GMT today. Stocks were trading for 701.00 in the early afternoon, falling away from the company's 52-week high of 771.48.

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