Sports Direct posts profit rise but cuts bonus scheme target

Budget sports retailer Sports Direct reported a 20.5% leap in pre-tax profit over its 2015 financial year.

Chief executive Dave Forsey said the “solid set of results” came despite performance being hit by England’s early exit from the World Cup and mild weather in the autumn reducing footfall at stores.

The retail giant owned by billionaire Mike Ashley released its full year results this week and also addressed questions about employee rights uncovered in a recent Channel 4 documentary.

The firm also announced it has passed all targets needed to trigger first payments to staff members involved in its Share Scheme, meaning some 2,000 employees will receive five million shares between them later this year.

“However, with our ongoing focus on providing customers with exceptional quality and unbeatable value, we have continued to grow Group revenues and EBITDA and have succeeded in surpassing our fourth and final EBITDA target under the 2011 Share Scheme”.

Shares (Frankfurt: DI6.F – news) in Sports Direct global (Other OTC: SDIPF – news) fell into the red as a better-than-expected 31% rise in pre-tax profit failed to offset a small miss on the revenue front and disappointment that the company has lowered its adjusted core earnings target for 2015/2016.

Referring to the use of zero hours contracts, which saw the business previously accused of using Victorian practices by former Labour leader Ed Miliband, Keith Hellawell, non-executive chairman, said the criticism has no foundations.

He said in a statement: “We comply fully with all legal requirements which relate to casual workers, including sick pay, holiday pay, and freedom to gain other employment”. At the current share price the total stock to vest in both tranches is worth more than £150 million. “Casual workers also participate in general incentive schemes”. “Such success, year on year, is a testament to the hard work and dedication of all our workforce for which the board thank and congratulate them”. Premium lifestyle sales dropped by 3%. Online revenue grew 14.4%, driven by the launch of click-and-collect in the UK. It also established a fitness division in the year, comprising 27 gyms, including two combined gym and retail sites.