Sports Direct makes up with Adidas after spat

LONDON Thu Jul 17, 2014 3:48am EDT

Shoppers wait outside a branch of Sports Direct in Brighton southern England December 15, 2011. REUTERS/Luke MacGregor

Shoppers wait outside a branch of Sports Direct in Brighton southern England December 15, 2011.

Credit: Reuters/Luke MacGregor

LONDON (Reuters) - Britain's biggest sporting goods retailer Sports Direct posted a 20 percent rise in full-year profit and said it had made up with key supplier Adidas AG after a recent row with the German sportswear firm.

Sports Direct had criticized Adidas for its decision not to supply the firm with replica shirts for the teams it sponsored at the World Cup, due to it being unhappy with the presentation of the retailer's stores.

Sports Direct had said it felt the problem was more to do with its discount approach but chief executive Dave Forsey told reporters on Thursday recent talks had been productive.

“The recent dialogue with Adidas has been encouraging," Forsey said. "They are beginning to understand at the top level within their business the efforts we're making in terms of the stores."

The group, which has over 600 sports stores in Europe, including 400 in the UK, said underlying pretax profit for the year to April 27 jumped to 249.3 million pounds ($427 million), slightly below analysts' average forecast of 255 million.

Its shares rose 1 percent to 721 pence in early trading.

Group revenue rose 23.8 percent to 2.7 billion pounds, led by strong underlying trade at its UK sports retail stores, the contribution of businesses bought in Austria and the Baltic region in May 2013, and a 26.8 percent rise in online sales.

Sales in fashion and brands were also up, while group gross margin increased 180 basis points to 42.7 percent.

Sports Direct said trading at the start of its new fiscal year had been in line with its expectations.

It also added that it had again decided not to pay a dividend while it pursues acquisitions, particularly in Europe, where a 40 billion pound sports retail market equates to eight times that of the UK's.

Forsey would not comment further on plans to reward its founder and deputy chairman Mike Ashley. On Wednesday Ashley quit a 200 million pound share bonus scheme, that despite much opposition had been approved by investors just two weeks earlier.

($1 = 0.5835 British Pounds)

(Editing by Paul Sandle)