England’s laughable and inevitable early exit from the World Cup cost Sports Direct up to £20m in lost profits, the group said, as disappointed football fans failed to buy replica shirts.
Dave Forsey, chief executive, said Roy Hodgson boys’ lacklustre performance was much more significant to the business than a dispute with Adidas which meant Sports Direct could not stock replicas of the on-field strips of key teams, including the winner Germany and runners-up Argentina. The brand has pulled stock from a number of different retailers, because it was unhappy at the presentation of goods or customer service.
“England’s early exit meant a £10m to £20m swing to [underlying profits],” he said. “It’s all about England for the World Cup for our stores. What affects sales primarily will always be how long England lasts in the tournament.”
While Sports Direct revealed a healthy 15.6% rise in pretax profits to £239.5m on sales of £2.7bn, up 23.8% in the year to 27 April, driven by strong sales of sportswear as well as the acquisition of fashion chain Republic, Forsey said performance would have been better if the national team had hit the back of the net more often.
However, Forsey said Sports Direct was hopeful of stocking the key Adidas football strips it wants, including Premier League team Chelsea’s after “encouraging discussions” with the sports brand which stopped supplying certain strips to Sports Direct earlier this year. Forsey was not able to confirm if and when Adidas might begin supply but he said:”Top-level engagement has been encouraging for the last couple of weeks and both teams see opportunities for their side.”
Sports Direct is also seeking a rapprochement with shareholders after a bruising battle over the bonus scheme which would have significantly benefited the chain’s founder, Mike Ashley. On Wednesday, the company said Ashley had chosen to withdraw from the scheme, just two weeks after it had been approved. The move was widely welcomed by major institutional shareholders who felt the bonus arrangements were inappropriately structured.
They want Ashley, who owns a 58% stake in the company but does not receive any pay for his role as executive deputy chairman, to be rewarded by a salary or a dividend that would benefit all investors. Shareholders had threatened to vote against the re-election of the chairman Keith Hellawell and some non-executive directors, but Forsey said their protests had not affected Ashley’s decision.