Sports Direct
In its interim results for the 26 weeks to 29 October 2017, Sports Direct’s reported profit before tax fell 67%, from last year’s £140.2m to £45.8m.
Underlying profit before tax was 22.9% higher at £88m, however, and group revenue was up 4.7% to £1.7bn from £1.6bn.
Notably, its UK sports retail business brought in weaker sales over the period, with revenue falling from £1.15bn to £1.14bn, a 1% change.
While shares were down more than 6% in early trading, they rallied by mid-morning, settling 4% lower at £3.70 per share.
Its trading update comes one day after shareholders rejected a proposed £11m payout for the brother of chief executive Mike Ashley.
Despite this, Ashley maintained a positive outlook for the group heading into 2018 and said the group intends to open between 10 and 20 flagship stores next year.
“While our reported profit before tax has been impacted by fair value adjustments and transitional factors such as the disposal of assets in FY17; our underlying profit before tax remains healthy,” Ashley said. “We will continue to invest for the long term and our net debt has increased in line with management expectations.
“We continue to anticipate that growth in underlying EBITDA during FY18 will be within our forecast range of 5% to 15%.”
Mixed fortunes for Woodford
Thursday’s trading brought mixed fortunes for two holdings owned by one of the UK’s most well-known managers, Neil Woodford.
FTSE 250 tech firm Capita’s shares stumbled 14%, as it warned underlying pre-tax profits would rise “modestly in the second half of the year” in its pre-close trading update.
Markets were also spooked by its high leverage ratio with debt standing 2.9 times higher than earnings. However, the firm said it expects leverage to fall between 2 and 2.5 times by the end of 2017.
Though Woodford has aggressively grown his position in the London business process outsourcing firm since mid-2016, owning around 10% in August this year, in recent months he has been steadily dumping his shares, dropping from 40 million to about 20 million.
The stock made the top 30 largest holdings in his £8.13bn equity income fund, accounting for 1.11% of the portfolio at 31 October.
Though Capita admitted that “the market for major business process management contracts has remained subdued” throughout the year, it confirmed it had secured a seven-year contract with the cabinet office to administer the Royal Mail Statutory Pension Scheme and has a bid pipeline worth £2.5bn.
However, it noted that these bids are unlikely to impact profits in 2018 but stressed they are “expected to create value for shareholders over their lifetime”.
Meanwhile, a lesser known Woodford-owned firm, Synairgen saw its shares take off Thursday morning.
After giving Pharmaxis total responsibility for its fibrosis treatment programme in exchange for £5m, the drug manufacturer became one of the top risers of the London Stock Exchange and saw its market cap swell to £18m.
The price per share leapt from 11p the previous close to 15p in the span of a few hours, up nearly 35%. However, its shares are only up 12% year-to-date after suffering a steep drop in price in April.
Woodford is the largest shareholder with a 23.1% stake in the business, according to the firm’s own website.
Ocado
Online supermarket Ocado, which has been given traditional brands like Sainsbury’s and Tesco a run for their money, also released a trading statement today reporting double-digit revenue growth and an uptick in orders to its site.
In the 14 weeks to 3 December 2017, retail revenue, which includes revenues from its other wholesale partnerships like Fabled and Fetch, grew 11.6% from £334.8m to £373.8m year-on-year.
The number of average orders per week was also around 11% higher with 280,000 orders placed versus 252,000 per week last year.
Average order size was marginally higher at £106.11 compared with £105.83.
Its shares were up some 3% to £3.50 per share, higher than they have been trading for most of the year.
