Interactive Investor

Sports Direct targets land of Oz

14th July 2014 13:39

Lee Wild from interactive investor

Sports Direct is shipping its sportswear brands half-way round the world in a significant tie-up with Far East internet retailer MySale. Less than four weeks after buying a 4.8% stake in the newly AIM-listed company, the UK high street chain will soon start targeting MySale's (MYSL) 12 million members in Oz and beyond. And with the share price up as much as 5%, the promise of overseas expansion is clearly tempting investors.

A partnership with MySale's OzSale.com.au website will launch Sports Direct in Australia and New Zealand later this year. It will open three flagship stores in Australia and one in New Zealand, too. A tie-up with a top Australian retail partner will be announced shortly, said the company.

"It will be great to enter these markets, where sport is a way of life," said Sports Direct's chief executive Dave Forsey. "I have been really impressed by the team at MySale and look forward to working with them."

Mysale, an online flash sales fashion retailer, will operate the e-commerce platform. The company, which also operates in Malaysia, the Philippines and Thailand, typically runs the flash sales for three days.

With the row over founder and majority shareholder Mike Ashley's bonus now resolved, and rumours of a bid for shoe seller Office scotched, focus returns to the day-to-day running of Britain's largest sports retailer.

And we'll get a good idea of how things are going on Thursday 17 July when the company publishes figures for the year-ended 27 April 2014. Eleven weeks ago, it said sales were up over 10% in the nine weeks to 30 March and gross profit 11.5% to £147 million. And Mr Forsey was confident of making underlying earnings before interest, tax, depreciation and amortisation of £310 million.

Broker Jefferies remains optimistic, too. It reckons Sports Direct should grow profit by another 25% in 2015 and 13% in 2016.That gives adjusted earnings per share of 36.9p for 2015 and 43.1p for the year after.

At 727p, Sports Direct shares trade on a 2015 calendar price/earnings ratio of less than 19, or a price/earnings to growth (PEG) ratio of under 0.9. "Successful international retailers trade at much loftier valuations on a growth-adjusted basis," says Jefferies.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.