Sports Direct's full-year results: What the analysts say

The past year has seen another strong performance at its core sports retail division. This was boosted through the acquisition of a further two international subsidiaries in Austria and the Baltics. The retailer notes that trading performed strongly, even in the face of tough comparatives from the previous financial year, which saw major sporting events such as the European Championships and London Olympics. The retailer’s sports offer is now market leading, and its combination of group-owned brands (such as Slazenger and Everlast) alongside a full-scale offer of third-party brands such as Nike and Adidas means its proposition is unrivalled by any of its major competitors. Combined with the company’s ruthlessness and scale, consumers are finding Sports Direct continues to offer the widest range of sports goods at the lowest prices. Overall, this is another barnstorming set of results for the sports and fashion retailer. Whatever you may think about Sports Direct, and namely its founder Mike Ashley, it is undoubtedly a robust business supported by extremely shrewd and strategic financial management. Sports Direct’s growth shows no signs of abating, and its progress continues to be underpinned by solid levels of domestic growth, a widening brand and fashion presence, and a burgeoning store portfolio globally. – Greg Bromley, Conlumino

Underlying EBITDA came in at £331m, ahead of consensus of £324m. This includes a £20m loss, compared with a £1m profit for full-year 2013, in the premium lifestyle segment, which was largely due to restructuring costs at Republic. This highlights the strong profitability performance in the rest of the group. We consider this a strong release, with double-digit in-store and online sales like-for-like growth supporting the attractiveness of offer and effectiveness of strategy at Sports Direct. This is further validated by the continued gross margin expansion, underpinned by merchandise mix improvements, which is important to our long-term positive thesis on the stock. – Franklin Walding, Goldman Sachs International 

With strong full-year 2014 results, in line with expectations, and the incentive scheme saga over, we think the market will refocus on the longer term growth potential. Sports Direct is a category killer in the UK, with plenty more to go for as it broadens its reach. There is option value for growth in Europe, where we expect acquisitions to play an important part. The company’s stretch EBITDA target for the 2015 full-year is £360m. This has been reiterated. We are slightly ahead of this on £377m. Current trade has seen some stronger weeks, offset by the disappointing World Cup – overall it is in line. – Sanjay Vidyarthi, Liberum

Amazingly, after all the fuss about Mike Ashley needing extra motivation, there is no change today in Sports Direct’s policy of not paying a dividend, so there is no clue in today’s finals on why he pulled out of the controversial share option scheme yesterday. The statement itself says: “Overall trading since the year end has been in line with management’s expectations with some stronger weeks offset by England’s disappointing World Cup matches.” This begs a few questions and it may be a surprise that the apparently conservative £360m underlying EBITDA target for this year has not been raised (after the 15% growth to £331m to the year end April). – Nick Bubb, independent analyst