MIKE Ashley’s retail business Sports Direct has continued to shrug off the consumer spending slump with a strong set of results and the possibility of a £12m shares payout for the Newcastle United owner.
Ashley, who is the discount clothing retailer’s executive deputy chairman, currently receives no income from Sports Direct but he did net £929m when he sold 43% of the business in February 2007.
The 397-store chain, which owns brands including Slazenger, Donnay and Karrimor, said retail sales were up by 8.2% to £697.1m after a strong performance in an “especially fragile consumer environment”.
Its underlying earnings rose by 2% to £139.2m in the six months to October 23 and the interim figures mean Sports Direct is on course to hit its full-year target of £215m, which would trigger the staff bonus scheme.
A new bonus scheme was introduced earlier this year that runs for four years and requires targets to be hit in each year.
But for Ashley’s shares bonanza to kick in, the group must hit a £225m target this year and further “super- stretch” targets in subsequent years.
It is proposed that he will receive six million shares – with a current value of around £12m – in 2018 if the targets are all met and shareholders approve the scheme.
The current staff bonus scheme, now in its second year, rewards around 2,000 Sports Direct staff with share payouts when the company hits its targets.
However, the company still has not reinstated its dividend for shareholders.
Sports Direct chief executive Dave Forsey said the introduction of the bonus had been a “game changer” for the company in terms of hitting targets.
He said: “The board is excited about the opportunities in 2012 with the busy Summer of Sport, including both the UEFA European Championships and the London Olympics.
“Both of these events combined makes us confident of reaching our £250m underlying EBITDA target (before scheme costs) for the full year 2013.
“We believe that our strong performance to date and our confidence going forward is underpinned by our 2011 Employee Bonus Share Scheme and the substantial potential for growth in our online offering.”
Sports Direct, which is taking market share from struggling rival JJB Sports, also benefited from an 85% increase in online sales.
The group said current trading ahead of its key Christmas period has continued to be in line with its expectations. But it refused to give any further clues about whether it is interested in buying outdoor clothing company Blacks, which recently put itself up for sale.
Sports Direct is already Blacks’ biggest shareholder and launched a failed bid for the company last year.
Independent retail analyst Nick Bubb said: “They look on track for a good year, in line with expectations and the only real surprise is that there is no interim divi.”