Analysis: Sports Direct - where will its future growth come from?

With JJB’s future looking perilous, Sports Direct’s position as the clear sports market leader is more secure than ever. Retail Week looks at what opportunities the sports giant has to propel its seemingly unstoppable growth.

ONLINE

The retailer realised the potential of online some time ago and has rebadged its stores as SportsDirect.com to capitalise on the growing number of shoppers buying on the web. It has even launched a TV advert - with an annoyingly catchy jingle – to promote the site.

It has clearly worked - its online sales rocketed 82% in its last financial year and now represent 11.6% of Sports Direct’s sales, up from 7% the year previously.

There still seems to be a lot to go for online as sales momentum continues into its current year. Sales through the channel are understood to be up 60% to 70% in its first quarter, according to Singer Capital Markets.

Founder Mike Ashley has been waxing lyrical about how bricks-and-clicks is transforming its business and has helped propel online growth by expanding its web offer, which has become the go-to-website for anything sports related.

MOVING UPMARKET

Surprisingly for some, Sports Direct moved into the fashion market last year with its acquisition of the USC and Cruise chains. After its buys, it set up a premium lifestyle division which it has further bolstered by snapping up indie designer chain Flannels this July.

The division is already adding to its bottom line, contributing £12.1m of gross profit in the first quarter against sales of £28.8m.

Observers believe the sports giant will grow the division with further acquisitions, and being cash rich in a tough environment, Sports Direct is likely to benefit from many attractive deals.

INTERNATIONAL

Sports Direct has already signalled its intention to grow its business overseas. It aims to have a presence in all Eurozone countries by 2016 and opened nine European stores in its first quarter.

Its international retail sales jumped 16.6% to £154.2m in its last financial year.

Sports Direct chief executive Dave Forsey says that in the next 10 years it will be fighting it out with French giant Decathlon for global dominance. It is also planning to expand further afield and is eyeing re-entering China in the next four years.

ITS UK BUSINESS

Despite being an established UK player, the retailer is achieving domestic growth figures that most retailers can only dream of. Its UK sports retail sales were up 7.9%to £1.3bn in its last financial year. Its unrivalled sportswear offer and sharp prices is still drawing the crowds and with the prospect of its major rival JJB Sports disappearing from the high street, there is still much to go for at home for Sports Direct.