BEFORE yesterday’s slump, shares in Sports Direct had risen by more than 90 per cent so far this year. Six years after its flotation at 300p, even early investors in Mike Ashley’s empire have more than doubled their money – while those that were brave enough to buy in when it fell to 32p in 2008 will have made even more.
Of course investors were hit with a trio of moderately disappointing news – targets were maintained rather than upgraded; no replacement was announced for outgoing finance boss Bob Mellors, and the outlook softened, with trading back within management expectations after outperforming in the first half. Coming all at once, it was enough to drive something of a selling spree. But there were bright spots in the statement too.
Aside from a decent bump in both revenues and profits, the group is also still well on track to hit full-year targets. Maybe investors don’t like the staff bonuses that come with the success (the company has not yet resumed its dividend, after all), but there’s no immediate need to be worried about profits. Online sales are also growing fast – now making up 15.5 per cent of sports retail sales – while investment seems to be focusing on growing across Europe into less saturated markets.
Shareholders are clearly worried that yesterday’s cautious update is a portent of things to come. There’s no need to panic, but maybe it’s time to give the shares a chance to breathe until there’s more to play for.