Shares in Sports Direct jumped more than 16% to 418p in early trading today, after the retailer announced a 160% increase in profits to £193.4m in its half-year financial report.
The sports fashion retailer said the profit growth was largely due to “improved” underlying EBITDA, which increased by 21.8% to £181.2m, and a £84.9m gain arising from the sale and leaseback of its Shirebrook distribution centre.
In the 26 weeks to 27 October 2019, group revenue also surged by 14% to £2.04bn, and its UK ‘Sports Retail’ revenue grew by 6.2% largely due to acquisitions in the period.
Additionally, the group said premium lifestyle revenue rose by 79.2% due to new Flannels stores and a full period contribution from House of Fraser, which it acquired out of administration in an eleventh-hour deal at the start of 2019.
The positive results come after Sports Direct revealed it had received a payment notice from the Belgian tax authorities to the amount of €674m (£561m) (including 200% penalties and interest) in July.
It was also reported that accountants at Grant Thornton were only informed of the claim from the Belgian authorities on day the retailer was due to announce its annual results, according to a report by the Telegraph.
David Daly, non-executive chair, said: “I have now been chair for just over a year. It has been an eventful but rewarding time to be involved in the company. We have experienced some challenging events which included a significant tax inquiry in Belgium and the continued integration of a broken House of Fraser business into the group.
“We continue to maintain that the Belgian tax issue will not lead to material liabilities and we are committed to finding a resolution as soon as possible.”
He added: “I am very proud of the results we have achieved during this half year period and what the group has achieved during a very tough and challenging retail environment.”