Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

18 / THE BUSINESS REVIEW
Chief Executive’s Report
our strategy
The Group’s growth strategy is based on the key principles described in the
business model. Examples of how the growth strategy is implemented so far and
the Group’s aims for the future are described in the table below.
objective so far what next?
identify
invest
develop
promote
in-store
acquisitions
store
portfolio
people
website
brands
Since 2007 we have owned 25% of Brasher Leisure, trading as
Sweatshop. This has enabled us to develop the SheRunsHeRuns
concept in our stores. To date, 50% of our stores have a dedicated
SheRunsHeRuns area, and 15% have a Field & Trek product area. Our
newest collaboration with Soccer Scene and The Boot Room is currently
in 80% of stores.
In 2011 the Group acquired the Hot Tuna and Firetrap brands, the
remaining 50% of No Fear, and created the Premium Lifestyle division by
acquiring Cruise, USC and Van Mildert, then Flannels in 2012.
Since April 2011, UK Retail has opened 12 core stores and closed
13 core stores. The Group also opened six and closed three
non-core stores.
European retail opened nine new stores. The Group now has stores in
nine different countries.
People are at the heart of the success of the Group and to ensure this
is recognised employees are enrolled into the Bonus Share Scheme.
If the Group’s targets are achieved, members of the scheme are
rewarded with shares in the company. The targets of the 2009 Bonus
Share Scheme were achieved. For more information see pages 28
and 61.
Online retail sales currently account for 11.6% of total UK Sports
Retail revenue.
The Group’s portfolio includes a wide variety of world-famous sport,
fashion and lifestyle brands. The Group’s Retail division sells products
under these Group brands in its stores, and the Brands division exploits
the brands through its wholesale and licensing businesses.
The wholesale business also wholesales childrenswear and other
clothing. The licensing business licenses third parties to apply
Group-owned brands to non-core products manufactured and
distributed by those third parties, and third parties are currently
licensed in different product areas in over 100 countries.
Risk Management Framework
The ability to successfully implement the strategy and business model is sometimes hindered by the
various risks encountered within the business environment. The Group’s risk management strategy aims
to mitigate the principal risks facing the Group and is discussed in ‘Risks and Uncertainties’ on
pages 30 to 33.
The Group continues to enhance its in-store offering with dedicated
areas for specialist product collections.
The Group continue to identify suitable opportunities to expand the
product range and its Premium Lifestyle division.
The Group intends to continue to enhance its varied store portfolio in
both the UK and overseas. The Group consistently progresses with
its strategy to identify partners in new territories while expanding
operations in the countries where the Group currently has a presence.
Plans are in place to expand International Retail operations into four
more countries in the current financial year. The Group also completed
the acquisition of 32 freehold and leasehold properties for an aggregate
consideration of £86.8 million
Due to the success of the first Bonus Share Scheme and to continue
to encourage and motivate employees, the new 2011 Bonus Share
Scheme has been introduced. For further information see pages 28
and 61.
Online revenue continues to be an area of growth and the Group is
looking at opportunities to develop this revenue stream further. The
system is built and serviced in-house and the website has benefited
from the increase in recognition of the online brand now that 351 stores
have the SPORTSDIRECT.com fascia.
The Brands division is closely involved in the development of licensed
products and monitors licensees and their manufacturers to ensure
product quality, presentation and consistency with the appropriate
brand strategy. The Brands division continues to sponsor a variety of
prestigious events and retains a base of globally-recognised, high-profile
sportsmen and women.
The Brands division wholesale business sells the brands’ core products,
such as Dunlop tennis rackets and Slazenger tennis balls, to wholesale
customers and distributors throughout the world.