Sports Direct International success places retail sector in the spotlight

Sports Direct International is expected to reveal more details of its plans to resurrect a contentious bonus scheme

Sports Direct, owned by Newcastle boss Mike Ashley
Sports Direct, owned by Newcastle boss Mike Ashley

The continued success of Sports Direct International and trading recoveries of Mothercare and Thorntons will place the retail sector in the spotlight this week.

Sports Direct International is expected to reveal more details of its plans to resurrect a contentious bonus scheme for founder Mike Ashley on Thursday, as 2,000 staff also prepare to land bumper share windfalls.

The Sports World business is set to outline the terms of a new bonus plan for Newcastle United owner Mr Ashley after a previous scheme, which would have delivered a potential £26m payout, was withdrawn last summer after investors threatened to reject it in a shareholder vote.

Its full-year figures will also be keenly awaited by staff, many of whom are on track to clear another hurdle under their 2011 four-year share incentive bonus scheme.

This comes on top of a lucrative bonus scheme from 2009, which will pay out the second and final tranche of shares to around 2,000 of Sports Direct’s 23,000-strong workforce in August.

For an employee earning a salary of £20,000 a year in 2009, next month’s payout will see them pick up 12,000 shares - worth more than £68,000.

Sports Direct has already said the group has surpassed the second year target to achieve £270m in underlying earnings for the 2011 scheme.

But it must meet earnings targets for the following two years before paying out 2,500 shares in 2015 and 7,500 shares two years later.

Analysts expect Sports Direct to post a 19% leap in underlying earnings to £287.3m for the year to April 28, while they are pencilling in pre-tax profits of £215 m.

Sports Direct has enjoyed a solid year, with sales soaring in the wake of rival JJB’s collapse.

Total sales for the nine weeks to March 31 rose 14.3% and gross profit lifted 22.7% to £128.6 million.

But despite the stellar performance, Mr Ashley’s bonus scheme is likely to prove a controversial issue when investors get the chance to vote on it at the annual meeting coming up in September.

He has not taken a salary since the 2007 stock market debut, but recently raised £100 million after selling a 4% stake in his company.

This followed his sale of a 43% stake for more than £900m when it floated.

Retailer Mothercare will update on turnaround progress when it publishes first quarter trading figures on Thursday.

The mother and baby goods retailer has been jettisoning loss-making stores as part of a three-year restructuring plan, and could announce more closures at an update covering the three months to the end of June.


David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer