The Sports Direct group has shifted the focus off boss Mike Ashley’s surprise shares rejection and on to its employees with the news that around 2,000 of them are set for a shares bonanza.
The company has had another record year, hitting bonus targets for the coming 12 months, preliminary results showed this morning.
Group revenue is up by 23.8% to £2.7bn with profit before tax up 15.6% to nearly £240m.
Chief executive Dave Forsey said: “We have delivered another record year of out-performance especially within our Sports Retail division. This success is underpinned by our core strategy, offering our customers a wide range of products which represent exceptional quality and unbeatable value.
“Through both individual hard work and operating as a team, against a particularly tough comparative which included the UEFA European Championships and the 2012 London Olympics, we have significantly out-performed the third underlying EBITDA target of £260m set under the 2011 Employee Bonus Share Scheme.
“This means that the group has now successfully met the first three targets and the board is very confident of achieving the final target of £300m under the 2011 Employee Bonus Share Scheme.
“Overall trading since the year end has been in line with management’s expectations with some stronger weeks offset by England’s disappointing World Cup matches. Consistent with previous guidance, we continue to target underlying EBITDA (before share scheme costs) of £360m for the current period.”
Ashley’s decision to pull out of the share scheme caused surprise, coming as it did just two weeks after he had won a long-running battle with shareholders over the issue. The Newcastle United owner was in line for a possible £180m bonus package and may now look to benefit instead from a dividend, according to analyst Nicla Di Palma of Brewin Dolphin.
Some shareholders were said to be planning to vote against chairman Keith Hellawall and others at the annual meeting in September because they feel the board demonstrated weak leadership over the matter of Ashley’s shares package. It had dragged on for two years and they saw the failure to reach resolution as weak leadership.
In a statement accompanying this morning’s results, Hellawall said: “The group’s Employee Bonus Share Schemes are some of the most wide-reaching and generous share schemes in the UK. The adoption of such schemes has proven highly effective at both motivating and remunerating our colleagues, and the performance of the group has gone from strength to strength since the initial scheme was first approved by shareholders in September 2009.
“The second and final award under the 2009 Employee Bonus Share Scheme vested in August 2013, with over 19 million shares being distributed to a deserving 2,000 or so employees. The high level of rewards for eligible participants has also proven key to employee retention, and we credit a great deal of our continued success to our loyal workforce.
“The motivation and retention of our key employees has also contributed substantially towards the group significantly out-performing the 2011 Employee Bonus Share Scheme underlying EBITDA (before scheme costs) targets for FY12, FY13 and FY14. I am convinced that the group has the right team in place to achieve the FY15 EBITDA target.”
The results showed that the group’s sports shops increased profits by 24% to £2,2bn. The Sports Direct brand operates in 19 countries across Europe with new store openings and acquisitions in the year. In the UK there are 400 UK stores and the group owns brands including Dunlop, Karrimor and Slazenger.
Earnings per share rose from 26.8p to 30.8p.