The Group's Interims today haven't impressed investors despite reporting small growth in Group Revenues and EBITDA.
Companies: Frasers Group PLC
Sports Direct (LON: SPD) has reported its Interims H1 18 Interims today which show a 160% swelling of Net Debt, eroding margins and weaker than expected UK sales.
Shares in the UK's largest sporting goods retailer dove 9% on Thursday morning as it reported a 4% uplift in Group sales despite a 1% downturn in Revenues from its core UK market.
Gross margins also slipped 180bps to 38.6% caused by "the impact of increased stock provisions and the continued impact of the USD exchange rate".
Net Debt also ballooned 160% to £472m which management said was due to "continued long-term investment in strategic relationships, the high street elevation strategy and the share buyback programme."
Whitman Howard's note on SPD this morning said the results "lacked clarity" and 'have not set [their] pulses racing".
"The combination of worse than (we) expected gross margin -180bps and opex down 3.9% have delivered 1 7.4% increase in Underlying EBITDA, which translates into a better than expected 22% increase in underlying PBT to £88m (WHE £78m). Clearly a 7% decrease in depreciation and amortisation against our expectation of a 10% increase highlights the low transparency in parts of the P&L."
SPD saw its share price grow from 300p to 416p over July and August this year after the release of its preliminary results and the appointment of a new CFO.
After today's price drop the stock trades at 348p while the Group trades at a 12-month forecast earnings multiple of 20x.
