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Jul 16, 2009
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Sports Direct axes dividend as profit falls

By
Reuters
Published
Jul 16, 2009

LONDON, July 16 (Reuters) - Britain's biggest sporting goods retailer Sports Direct International Plc (SPD.L) on Thursday 16 July posted a 9 percent fall in full-year core earnings and scrapped its final dividend as it seeks to reduce its debt burden.


Mike Ashley, 71% owner of Sports Direct - Photo: AFP/File/Lindsey Parnaby

The firm, 71 percent owned by billionaire Mike Ashley who also owns Newcastle United soccer club, forecast a small increase in earnings for its current year.

"The board is confident that our initiatives and hard work across all areas of the group leave us well positioned for the next phase of growth," said Chief Executive Dave Forsey.

Sports Direct made underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 136.8 million pounds in the year to April 26 2009, just beating its own guidance, and Forsey said that figure was expected to rise to at least 140 million this year.

EBITDA was 150.2 million pounds in the year to April 2008.

Many UK retailers have struggled over the past year as consumers have reined in spending amid sliding house prices, rising unemployment and fears of a long-lasting recession.

Sports Direct, which owns Sports World and Lillywhites stores as well as brands such as Slazenger, Lonsdale and Dunlop, said its revenue increased 8.6 percent to 1.37 billion pounds but its gross margin fell 280 basis points to 40.8 percent.

The firm ended the year with net debt of 431.3 million pounds but said it was operating comfortably within its banking covenants.

It said that as it is targeting to reduce debt below 400 million pounds by end-April 2010 it will not pay a final dividend this year. It paid an interim of 1.22 pence and a total of 4.5 pence in the previous year.

Shares in Sports Direct, which floated at 300 pence in February 2007, were trading down 2.4 percent at 80 pence at the market open, valuing the business at around 467 million pounds.

The stock has risen by a third over the last three months, outperforming the UK general retailers index .FTASX5370 by 14 percent.

The group is still without a permanent chairman over two years after David Richardson quit, having decided he could not work with Ashley, who made 929 million pounds from the float.

(By James Davey. Editing by Mark Potter, John Stonestreet)

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