25 April 2012
Sports Direct International plc
Pre-close Trading Update
Sports Direct International plc ("the Group" or "the Company") today provides an update on current trading in advance of its year end on 29 April 2012.
Group total sales for the nine weeks ending 25 March 2012 were up 13.2% to £267.6m (2011: £236.4m) and gross profit was up 13.5% to £99.8m (2011: £87.9m).
Retail division sales for the same period increased 16.1% to £232.6m (2011: £200.4m), and retail gross profit increased 15.1% to £85.4m (2011: £74.2m). This does not include sales and gross profit from the newly formed Premium Lifestyle division.
In the Interim Management Statement on 15 February 2012, the Board confirmed that the Group is now certain of reaching the full year targeted underlying EBITDA of £215m (before the charge for the bonus share scheme), and the "super-stretch" scheme target of £225m.
As the Company will achieve the super-stretch FY12 Group underlying EBITDA target, we shall be seeking shareholder approval at the 2012 Annual General Meeting for a Super-Stretch Executive Bonus Share Scheme ("Super-Stretch Scheme") for Mike Ashley, the Company's Executive Deputy Chairman.
Following further consideration, including an increase in the underlying EBITDA targets, a resolution will be proposed and the terms are set out below:
· Mr Ashley will be granted eight million shares, which will vest in 2018, if two performance criteria are met:
o The Company meets very stretching Group underlying EBITDA (before the 2011 and Super-Stretch Schemes' costs) targets in each and all of the following three years;
o The Company's net debt/EBITDA ratio is at 1.5x or less in FY15.
Mr Ashley's new targets for Group underlying EBITDA (before the 2011 and Super-Stretch Schemes' costs) are:
· FY13: £270m (2011 Employee Bonus Share Scheme: £250m)
· FY14: £290m (2011 Employee Bonus Share Scheme: £260m)
· FY15: £340m (2011 Employee Bonus Share Scheme: £300m)
Further to the announcement on 11 August 2011 and approval by shareholders at the General Meeting held on 7 September 2011, the Company has now completed the acquisition of 32 freehold and long leasehold properties from Mike Ashley, a director and shareholder of the Company, for an aggregate consideration of £86.8 million ("Acquisition"). The Acquisition has been financed through the utilisation of the Company's existing cash resources and banking facilities.
Dave Forsey, Chief Executive of Sports Direct International plc, said:
"The Group has continued to deliver strong growth during February and March, outperforming management's expectations. This performance continues to be primarily through the UK division where online sales now represent an even larger proportion of our total retail sales than envisaged at our Interim Results in December 2011.
"Management continues to believe that the Group's strong performance is underpinned by our resilient business model and our Employee Bonus Share Schemes.
"During March we successfully helped raise over £1m for Sport Relief charities and would like to thank our customers and staff for all their tremendous support.
"We remain positive about the Group's outlook and are excited about the summer ahead with the Diamond Jubilee, Euro 2012 and the London Olympics."
The Company will announce its Preliminary Results for the year ending 29 April 2012 on Thursday 19 July 2012.
For further information, please contact:
Sports Direct International plc
Dave Forsey, Chief Executive
Bob Mellors, Group Finance Director
0845 129 9229
0207 831 3113
Notes to Editors
2009 Employee Bonus Share Scheme - completed
Sports Direct introduced the employee Bonus Share Scheme in July 2009, and matched it with extremely stretching EBITDA targets and net debt to EBITDA ratios.
Both targets for Full Year's 2010 and 2011 were met. As a result, over 2,000 colleagues will receive 25% of their salary in shares, an average of 5,000 shares each (approximately 8m shares in total), in the summer of 2012; and a further 75%, an average of 12,000 shares each (approximately 26m shares in total), in the summer of 2013. The share awards will only take place if eligible staff are still in employment at the Company.
2011 Employee Bonus Share Scheme - underway
Following the success of the 2009 Scheme, which proved an excellent tool to encourage and motivate the entire organisation while helping to retain staff, Sports Direct subsequently introduced a second Bonus Share Scheme in 2011. This new Scheme has stretch underlying EBITDA targets for Full Year's 2012, 2013, 2014 and 2015. The stretch underlying EBITDA targets (before the charge for the bonus share scheme) are as follows:
Under the rules of the 2011 Scheme, all four targets must be met before the shares will vest. There are over 3,000 employees eligible for the Scheme and each could receive an average of 2,500 shares in the summer of 2015 (approximately 8 million shares in total) and an average of 7,500 shares in the summer of 2017 (approximately 26 million shares in total). The share awards will only take place if eligible staff are still in employment at the Company.