Mike Ashley's bombed-out Sports Direct International (SPD) rebounds 11.3% to 310.3p on relief annual numbers aren't as bad as feared. News the fallen sports retail titan is considering share buybacks helps the shares to rally hard, having crashed following a pair of profit warnings and criticisms of workplace practices at its Shirebrook warehouse.
You can pick through the details of the preliminary results announcement here. Given the growth rates the mass market sports kit purveyor delivered in periods past, the numbers make grim reading. Group revenue edged up just 2.5% to £2.9 billion in the year ended 24 April, like-for-like sales in the core Sports Retail stores reduced by 0.8% and underlying profit before tax decreased 8.4% to £275.2 million.
CEO Dave Forsey concedes Sports Direct 'has delivered a disappointing full year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses.'
He explains: 'Unfortunately our disappointing results have meant that the Group has not achieved the first EBITDA target set by the 2015 Share Scheme, which is a key long term share-based incentive scheme that rewards eligible staff for their hard work and commitment, and is based on the achievement of four consecutive full year EBITDA targets.'
Forsey says the failure to achieve this £420 million EBITDA target 'is very disappointing as the Share Scheme is a significant part of our high performance and reward culture, and we are working to replace this arrangement with a new incentive scheme to continue to reward our people for their commitment and performance.'
Though it avoids another profit warning, the outlook statement is downbeat, Sports Direct noting that 'trading since the start of May and leading up to the EU referendum was broadly in line with management expectations albeit with the continued volatility seen in the wider retail sector. Since the EU vote we expect the current political uncertainty, and potential weakness in the UK's short to medium term economic outlook, is likely to act as a continuing drag on consumer confidence.'
And 'when combined with the structural difficulties for UK retailers, including high street footfall, and our exposure to the weakness of the pound against the US dollar (as announced on 24 June 2016), these factors make the current outlook for FY17 somewhat uncertain and therefore hard to predict.'
Sports Direct scoffs rumours billionaire founder Ashley might buy his corporate baby back on the cheap. 'In response to repeated press speculation about his intentions with regards to his shareholding in Sports Direct,' states Sports Direct, 'Mike Ashley has confirmed to the board of directors that he has no current intention of taking the company private'.
In a recent scintillating-yet-candid appearance that had PR man Keith Bishop squirming in his seat, Executive Deputy Chairman Ashley gave evidence to the Business, Innovation and Skills (BIS) Select Committee regarding workplace practices at Shirebrook and has set in motion a review of the retailer's labour practices.
