Sports Direct Is The UK's Leading Sports Retailer - Sports Direct ...

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sports direct is the UK’s leading sports retailer by revenue and operating profit, and the owner of a significant number of internationally recognised sports and leisure brands. As at 26 April 2009 the Group operated out of 359 stores in the United Kingdom (excluding Northern Ireland). The majority of stores trade under the Sports Direct.com fascia. The Group has acquired a number of retail businesses over the past few years, and some stores still trade under the Lillywhites, McGurks, Exsports, Gilesports and Hargreaves fascias. Field & Trek stores trade under their own fascia. The Group’s UK stores (other than Field & Trek) supply a wide range of competitively priced sports and leisure equipment, clothing, footwear and accessories, under a mix of Group owned brands, such as Dunlop, Slazenger and Lonsdale, licensed in brands such as Umbro, and well known third party brands including adidas, Nike, Reebok and Puma. A significant proportion of the revenue in the stores is derived from the sale of the Group owned and licensed in branded products, which allows the retail business to generate higher margins, whilst at the same time differentiating the Group’s stores from its competitors, both in terms of the range of products on sale and the competitive prices at which they are offered. Field & Trek operates out of 16 stores in the UK, selling a wide range of camping and outdoor equipment, waterproof clothing and footwear, including leading brands such as Berghaus, Merrell and Salomon. The acquisition of Field & Trek gave the Group an entry into the outdoor market, which had been identified as a strategic opportunity for the Group, and that has been strengthened following the acquisition of Universal Cycles by the introduction of a range of cycle products in both stores and online. The Group has retail interests outside the UK and has a flexible approach to entry into markets. These interests include wholly owned retail outlets (in Belgium, Holland, Luxemburg and Slovenia), joint ventures with other retailers (such as in Northern Ireland and the Republic of Ireland) stores within another retailer’s store (as in Cyprus) and licence agreements as in South Africa and the Middle East. The Group’s portfolio of sports and leisure brands includes Dunlop, Slazenger, Kangol, Karrimor, Lonsdale, Everlast and Antigua. As previously mentioned 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 Brands division wholesale business sells the brands’ core products, such as Dunlop tennis rackets and Slazenger tennis balls, to wholesale customers throughout the world, obtaining far wider distribution for these products than would be the case if their sale was restricted to Group stores. 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. The Brands division is closely involved in the development of licensed products and monitors licensees and their manufacturers to ensure product quality and presentation and consistency with the appropriate brand strategy. The Brands division continue to sponsor a variety of prestigious events and retain a base of globally recognised talented sports men and women. The official tennis ball supplier agreements with The Wimbledon Championships and Roland-Garros are the foremost of these agreements. Dunlop’s professional tennis tour team continues to grow with James Blake being the Group’s highest ranked player. Cricketers Paul Collingwood and Matt Prior are sponsored by Slazenger whilst Lee Westwood and Darren Clarke continue to wear Dunlop apparel in major golf tournaments across the world. Other sports such as badminton and squash also provide opportunities of interest for Carlton and Dunlop respectively.
Financial Highlights • Group revenue up 8.6% to £1,367m (2008: £1,260m) • Underlying EBITDA down 8.9% to £136.8m (2008: £150.2m) • Underlying profit before tax down 20.1% to £68.2m (2008: £85.4m) Reported profit before tax down 91% to £10.7m (2008:£118.9m) after currency exchange and non-cash adjustments • Underlying earnings per share down 7.5% to 7.93p (2008: 8.57p) • Group gross margin decreased by 280 basis points to 40.8% (2008: 43.6%) UK retail gross margins down to 42.5% (2008: 45.7%) flat on currency neutral basis • Net debt at year end £431.3m Operating comfortably within banking covenants Target to reduce debt below £400m in the 2009/10 financial year • UK Retail like-for-like gross contribution: +2.5% • The Board decided not to recommend a final dividend Operational highlights • UK Retail clear market leader Sales exceeded £1bn Consolidating position through increasing product range and availability, controlling costs, improving sourcing, supply chain efficiencies and strengthening third party brand relationships • Successfully expanded international retail Opened seven new stores • Brands division good progress Growth in brands licensing – 41 new licences signed during the year Further consolidation of Brands division management in Shirebrook
Page 4 and 5: Contents Chairman’s statement Chi
Page 6 and 7: Dave Forsey Chief Executive overvie
Page 8 and 9: Brands division Total Brands revenu
Page 10 and 11: The Group historically hedged the r
Page 12 and 13: Basis of reportinG The financial st
Page 14 and 15: strateGiC investments During the Ye
Page 16 and 17: simon Bentley Acting Non-Executive
Page 18 and 19: The Board may refuse to register a
Page 20 and 21: auditors Grant Thornton UK LLP has
Page 22 and 23: The Board provides corporate govern
Page 24 and 25: share dealinG Code The Company has
Page 26 and 27: the performanCe share plan The Perf
Page 28 and 29: v a l u e o f h y p o t h e t i C a
Page 30 and 31: direCtors’ responsiBilities The d
Page 32 and 33: During 2008/09 a customer service h
Page 34 and 35: finanCial statements report of the
Page 36 and 37: Continuing operations: Consolidated
Page 38 and 39: assets non-current assets 52 weeks
Page 40 and 41: 1. aCCountinG poliCies The consolid
Page 42 and 43: Borrowings and borrowing costs Borr
Page 44 and 45: 4. seGmental analysis primary repor
Page 46 and 47: secondary reporting format — geog
Page 48 and 49: 10. finanCe inCome 52 weeks ended 2
Page 50 and 51: 14. property, plant and equipment f
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Value in use calculations are based
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17. availaBle-for-sale finanCial as
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21. share Capital authorised 26 apr
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25. BorrowinGs Non-current: 26 apri
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The assumptions used to determine t
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The dilapidations provision is the
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The sterling principal amounts of f
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adjustments to fair value for prior
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34. Capital Commitments The Group h
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eport of the independent auditor to
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1. aCCountinG poliCies notes to the
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7. reserves share premium account t
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egistrar and transfer office Capita
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