Sports Direct "has reaped the rewards of its move upmarket with soaring underlying annual profits, but it has still felt the effects of the crisis on the high street" with a drop in U.K. sales, according to Miles Costello of the LONDON TIMES. The sportswear retailer reported underlying pre-tax profits of £152.9M ($199M) for the 12 months to the end of April. That was a 34.5% increase on last year's £113.7M and "way above analysts' estimates." Statutory pre-tax profits fell by "nearly three quarters," however, to £77.5M ($100.9M) over the period. This was "largely" due to an £85.4M ($111.2M) financial hit on its investment in department store chain Debenhams (LONDON TIMES, 7/19). In London, Rovnick & Eley reported Sports Direct is "counting the cost" of its investment in "struggling" Debenhams. Sports Direct Finance Dir Jon Kempster said that the group was "satisfied" with recent trading in a period that included the World Cup and a "long period of unusually hot weather." He said, "Everybody's got behind the England team and we've seen some great sales of T-shirts and the like. You don't get a blip in the way you used to but we're satisfied with trading over the period." Kempster added that Sports Direct "had no plans to seek representation on the Debenhams board despite the size of its stake." Kempster: "It's more about strategic initiatives. We've said publicly we'd like to work with them on the internet and on the international footprint" (FINANCIAL TIMES, 7/19). In London, Woods & Torrance reported Sports Direct Owner Mike Ashley said that he will start "smashing into" Debenhams "for not listening to his advice." He said that Debenhams execs "ignored his recommendations to start charging customers for click and collect," a service that experienced "double-digit growth at the trainers-to-hoodies retailer." Sports Direct charges £5 ($6.51) to buy a product through click and collect, "but hands customers a voucher of the same value when they pick up their purchase in store." Ashley said, "At some point I will be smashing into [Debenhams] over why they cannot follow anything that Sports Direct suggests. Nothing. Seventy percent of people will use (the voucher) and spend on average £25 ($32.55) in the store. Now let me think if that is a good thing? Oh yes it is" (TELEGRAPH, 7/19).
