Sports Direct, which specialises in selling cut-price sportswear and is controlled by billionaire Newcastle United owner Mike Ashley, posted a strong rise in full year profit, boosted by online sales. Pre-tax profit was £162.1m in the year to April 29, a 17.3% increase on £135.5m last year.
And while many retailers have battled falling sales as low consumer confidence grips the high street, Sports Direct said sales rose 13% to £1.84bn during the year as it focused on pushing sales over the internet. Online sales rose 82% during the period and now accounts for 11.6% of its retail sales, Sports Direct said.
But while Sports Direct is toasting a strong year, it’s a different story for rival JJB Sports. The beleaguered retailer announced today it is seeking another round of rescue funds after poor summer trading derailed hopes of a turnaround. Like-for-like sales were down by 8.7% in the 24 weeks to July 15, and JJB now needs another cash injection. The firm has started talks with ‘strategic partners’ about the funds needed for overhauling stores – a move it had thought wouldn’t be required until early next year.
JJB, which has 180 stores and employs 4,000 people, last year announced plans to close 43 unprofitable stores and place a further 46 on review to stave off going into administration. It has struggled to compete with Sports Direct, which has managed to lure more customers with its aggressive discounting.
Sports Direct’s shares are trading at 294p, a nine-fold increase on lows of 32p in 2008. Meanwhile JJB’s shares are trading at around 5.5p, plummeting 25% this morning alone. Ouch.