Retailer Sports Direct has said it will extend its staff bonus scheme for the next two years after the incentive helped the firm deliver a 40% hike in profits.
The sportswear chain said eligible employees would receive a potential bonus of up to one year’s salary, weighted 25% in shares in the financial year ending 2012 and 75% in shares in 2013. The group must hit underlying earnings targets of £215 million and £250 million in each year respectively.
The company – controlled by Mike Ashley, the owner of Newcastle FC – said it was also confident of hitting this year’s underlying earnings target of £205 million and triggering this year’s bonus awards.
Non-executive chairman Keith Hellawell said there was “no doubt” the scheme helped the group record £100.7 million in pre-tax profits in the six months to October 24 and an 8% rise in revenues to £819.9 million.
Sports Direct said UK retail revenues were up 10% to £644.3 million in the first half.
The owner of Sports World stores and brands including Slazenger and Donnay reported its strongest ever trading day when England played the United States during the World Cup. The run-up to the football tournament boosted sales but the impact dwindled as England’s performance failed to live up to expectations, the company added.
Sports Direct is rolling out a strategy of store improvements, including new merchandising techniques, and openings. It is still on target to open between 10 and 15 new stores this year.
But Sports Direct is still cautious over its outlook. Chief executive Dave Forsey said: “We anticipate the general retail environment in the first few months of 2011 to be tough. However, trading since the end of October has continued to be in line with management expectations.”
But Matthew McEachran, an analyst at Singer Capital, said the continuation of the bonus scheme signalled a further boost to trading prospects. He said: “All divisions are progressing well and the combination of sharp value and rapidly improving store merchandising techniques is being well received by consumers.”
The Nottinghamshire-based company has more than 350 stores in the UK, the majority of which trade under the Sports Direct.com fascia with others branded Lillywhites, McGurks, Exsports, Gilesports and Hargreaves and Field & Trek. Around 2,000 staff will be eligible for the staff bonus scheme.