Sports Direct International Plc (LON: SPD) shares have rallied on Monday morning, as the firm gave a bullish update to the market.
Sports Direct has seen an impressive year of trading, with sustained profits through 2019. In a time where it seem that the high street is apparently collapsing evidenced by firms such as Mothercare, Sports Direct are not seeming to fail.
At the end of September, Sports Direct made an offer for Goals Soccer Centers, which saw shares in green.
Mike Ashley’s Sports Direct said in a statement that it had made a possible cash offer of 5 pence per share “for the entire issued and to be issued share capital of Goals, not already held by Sports Direct”.
Mike Ashley, had been hitting news headlines however, and after Ashley’s re-election earlier this year, the retail giant has been a big public image in the business world.
Ashley, at the end of October lashed out at the Competition and Markets Authority after alleged wrong market data was used in an investigation currently being carried out.
The response from Sports Direct comes as the CMA investigates the potential merger of JD Sports (LON: JD) and Footasylum (LON: FOOT).
Today, the FTSE250 listed firm aid its earnings increased in the first half of its current financial year despite a “very tough and challenging” retail environment.
The sports titan said pretax profit in the 26 weeks to October 27 grew 21% to £90.2 million from £74.4 million reported a year earlier, as revenue rose by 14% to £2.04 billion from £1.79 billion.
Sports Direct said that revenue growth was boosted by mergers and acquisitions, growth in Premium Lifestyle and Wholesale & Licensing divisions and the full period of revenue contribution from House of Fraser versus 11 weeks last year.
During the period, Sports Direct said it has experienced “some challenging events”, which included a tax inquiry in Belgium and the continued integration of a “broken” House of Fraser business.
Looking ahead, Non-Executive Chair David Daly said: “We are hoping that the political waters will be calmer in the coming months which will allow us to move out of this period of market unpredictability. This will enable us to plan appropriately for the future which is critically important.”
He added: “Despite ongoing challenges, we believe we are getting into a good place, building a solid foundation of elevation and efficiency which will lead to sustainable growth and a successful future.”
On the performance of House of Fraser, Ashley had his say: “It was, and it is only through the incredible efforts of those within the Sports Direct Group, including the remaining House of Fraser teams, that we are tackling these problems and trying to build a business with a future, a future for Frasers that is hopefully “bright”.
Ashley concluded “At the full year FY19 results, we concluded we could not reasonably predict where our FY20 results were going to land based on the uncertainty caused by the House of Fraser acquisition and the “significant operational and investment issues we are trying to rectify based on the appalling mismanagement of House of Fraser, prior to its acquisition by the Sports Direct Group, that led to its downfall.”
“As noted in the Chairman’s statement and below, House of Fraser is all but fully integrated into the Group, and is a work in progress to fix. The longer-term estate is still in the main to be concluded upon. However, given the seasonality of House of Fraser, something in the longer term we hope to address is the reliance on the Christmas period, and the fact our House of Fraser store estate – at least over this Christmas period 2019 – is secure means we are able to give Group guidance as we are confident in the outturn including House of Fraser.”
Shares in Sports Direct rallied 19.6% to 430p. 16/12/19 10:21BST.
