* Sees core annual earnings 5 to 15% higher
* HY core earnings grow 22% to 181.2 mln stg
* Shares jump 18 pct
(Adds share price, background, analyst comment)
By Sarah Young
LONDON, Dec 16 (Reuters) - Sports Direct, the
British retailer controlled by founder Mike Ashley, forecast
annual core earnings growth of as much as 15% for its current
financial year, helped by a nascent turnaround at department
store House of Fraser.
Problems integrating House of Fraser, which Sports Direct
bought out of administration last year, have dragged on the
group's earnings, with Ashley saying previously that the 90
million pound ($115.47 million) purchase may have been a
mistake.
For the 12 months to April 26 2020, Sports Direct said it
expects underlying core earnings (EBITDA) to grow between 5% and
15% to between 356 million pounds and 390 million pounds from
the 339 million pounds it made in the previous year.
Shares in the company were 20% higher at 431.8 pence by 1007
GMT, hitting their highest level since August 2018 after what
one trader called a "reassuring" statement.
Sports Direct had declined to give forward-looking guidance
in July, blaming the uncertain impact of House of Fraser on its
bottom line.
But on Monday it said it had stemmed losses at the
department store chain by rectifying mistakes made by its
previous management, cutting costs and changing the product mix
to one that generated higher margins.
"We are starting to see the green shoots of recovery as we
continue to integrate the business into the group,"
non-executive chairman David Daly said in a statement.
Liberum analysts called the first half-results very strong
and said that given the outlook, Sports Direct's market
capitalisation was too low.
REBRAND
Sports Direct shareholders will later on Monday vote on a
plan to rebrand the company as Frasers Group as it focuses on
its new Frasers luxury lifestyle stores.
Losses in the premium unit, which in addition to House of
Fraser includes upmarket fashion store Flannels, narrowed to 5.6
million pounds in the half year to Oct. 27 from 29 million
pounds a year earlier.
A 71% rise in earnings in its European retail business also
helped boost half-year results.
Sports Direct said the clear outcome of Britain's
parliamentary election last week would make the market more
predictable, while cost savings at the group, which has recently
added Game Digital UK, Evans Cycles and Sofa.com to its
portfolio, would help boost profits.
Underlying earnings (EBITDA) including acquisitions for
first half rose 22% from a year earlier to 181.2 million pounds.
The group repeated its belief that it would not be on the
hook for any "material liabilities" from a 674 million euro bill
from Belgium's tax authorities and that it was seeking a
resolution as soon as possible.
Some 62% of Sports Direct is owned by Ashley, its founder
and chief executive, who also owns Premier League soccer club
Newcastle United. His relationship with investors has been rocky
recently after a series of missteps over corporate governance
and employment.
($1 = 0.7794 pounds)
(Reporting by Sarah Young; editing by Kate Holton, Kirsten
Donovan)
