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SPORTS DIRECT INTERNATIONAL PLC

Interim Results PresentationFor the 26 weeks ended 26 October 2014

Thursday 11th December 2014

Dave ForseyCHIEF EXECUTIVE

FY15 H1: Group Highlights

3SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014

• Sports Retail gross margin increased by 130 bps to 44.5%

• Group underlying EBITDA increased by 10.8% to £203.1m

• Underlying profit before tax up 9.8% to £160.6m

• Underlying free cash generation of £161.5m

• Oxford Street store re-located in May 2014

• Roll-out of large format city centre stores

• 29 new license agreements signed with contracted minimum

royalties of $12m over the life of the agreements

• Continued investment in inventory and strategic stakes while

maintaining a strong balance sheet

• Net debt decreased to £186.5m (£212.0m at 27 April 2014)

Neustadt, Austria

Neustadt, Austria

FINANCIAL REVIEW

+£77.2m

-£2.9m

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

FY14 H1 Sports Retail Stores ¹ Sports Retail - online Premium Lifestyle Brands FY15 H1

+£17.6m -£4.1m

Reve

nu

e (

£m

)

-3.9%

+7.9%

-2.8%

£1,345m

£1,433m+11.1%

FY15 H1: Group Revenue Bridge

• Sports Retail revenue growth of 8.3%

• Group Revenue growth of 6.5%


(1) Includes Wholesale and Other

Sports Retail Revenue

41.4

40.3

40.9

40.3

43.2

42.9

44.5

39.0

40.0

41.0

42.0

43.0

44.0

45.0

H1'12 FY'12 H1'13 FY'13 H1'14 FY'14 H1'15

Gro

ss

Ma

rgin

(%

)

Gross Margin %

Sports Retail Gross Margin

977 1,055

159

176

400

500

600

700

800

900

1,000

1,100

1,200

1,300

FY14 H1 FY15 H1

Revenue (

£m

)

Online

Stores and Other*

• Online revenue growth of 11.1%

• Stores and other growth of 7.9%

£1,136m

£1,231m

FY15 H1: Sports Retail Overview

• Gross margin increase of 130 bps year on year due to

higher proportion of ‘better’ and ‘best’ Group branded

product


FY15 H1

(£m)

FY14 H1

(£m)

Change

(%)

Store Wages 120.4 103.7 16.1

Premises Costs 106.8 92.0 16.1

Other Retail Costs 126.7 114.9 10.3

Sports Retail Operating Costs 353.9 310.6 13.9

Sports Retail Underlying EBITDA pre associates 194.2 180.3 7.7

Associates (Heatons & others) 1.6 0.9 77.8

Sports Retail Underlying EBITDA 195.8 181.2 8.1

FY15 H1: Sports Retail Operating Costs


• Sports Retail operating costs impacted by the full year effect and proportionally higher costs in our

acquired European businesses

FY15 H1

(£m)

FY14 H1

(£m)

Change

(%)

Revenue 99.9 102.8 (2.8)

Gross margin 38.4 44.2 (13.1)

Gross margin % 38.4% 43.0%

Store Wages 9.9 13.9 (28.8)

Premises Costs 20.7 27.0 (23.3)

Other Costs 15.6 15.2 2.6

Total Operating Costs 46.2 56.1 (17.6)

Division Underlying EBITDA (7.8) (11.9) (34.5)

USC/ Republic

USC/ Republic

Van MildertVan Mildert

Flannels

Flannels

0

20

40

60

80

100

120

FY14 H1 FY15 H1

Re

ve

nu

e

£102.8m £99.9m

CruiseCruise

FY14 H1

• May 2013: acquired remaining 20% of Cruise

• July 2013: acquired 51% of Pulp, a six store retail fashion chain

FY15 H1

• Continued rationalisation of USC business

• Further growth in online sales across the division

FY15 H1: Premium Lifestyle


• Gross margin impacted by clearance of surplus stock in Flannels, Cruise and Van Mildert

90.8 86.8

15.4 15.3

0

20

40

60

80

100

120

FY14 H1 FY15 H1

Re

ven

ue

(£

m)

• Revenue: down 3.9%

– Licensing: down 0.6%

– Wholesale: down 4.4%

• Wholesale margin increased to 32.7%

– Up 70 bps

• Licensing:

– FY15 H1: 29 deals completed with contracted minimum royalties of $12m over the life of the agreements

£106.2m

Licensing

Wholesale

£102.1m

FY15 H1: Brands Division


FY15 H1

(£m)

FY14 H1

(£m)

Change

(%)

Wages 9.7 12.0 (19.2)

Advertising & Promotion 7.6 6.4 +18.8

Other Brands Costs 11.4 11.9 (4.2)

Total Brands Operating Costs 28.7 30.3 (5.3)

Brands EBITDA 15.1 14.0 +7.9

FY15 H1: Brands Operating Costs


£183.3m

£203.1m£197.0m

+8.1%

+7.9% +1.7%

£14.6m

£4.1m £1.1m (£6.1m)

+10.8%

140

150

160

170

180

190

200

210

FY14 H1 pre Share

Scheme charges

Sports Retail Premium Lifestyle Brands FY15 H1 pre Share

Schemes' non-cash

charges

Share Schemes'

non-cash charges

FY15 H1

+34.5%

UN

DE

RL

YIN

G E

BIT

DA

(£M

)

FY15 H1: Underlying EBITDA Bridge


• Group underlying EBITDA (pre Share Scheme charges) increased by 10.8%

• Sports Retail growth includes the acquisition of EAG and SIG (acquired in June 2013 and August 2013, respectively)

FY15 H1

(£m)

FY14 H1

(£m)

Change

(% )

Underlying EBITDA (pre Share Scheme charges) 203.1 183.3 +10.8

Bonus Share Scheme charges (6.1) (6.0) +1.7

Depreciation (33.0) (28.4) +16.2

Interest (4.7) (4.1) +14.6

Investment Income 1.3 1.3 -

Underlying PBT 160.6 146.2 +9.8

Underlying Taxation (36.9) (36.4) +1.7

Non-controlling Interests (0.7) 0.1 nm

Underlying Profit for the period 123.0 109.9 +11.9

Number of shares (000s) (1) 592,294 578,454

Underlying EPS 20.8p 19.0p +9.5

FY15 H1: PBT / PAT / EPS


(1) The weighted average number of shares includes the impact of the vesting of 24 million shares in August and October

2013 under the 2009 Employee Bonus Share Scheme and the Executive Bonus Share Scheme, respectively

FY15 H1

(£m)

FY14 H1

(£m)

Change

(% )

Sports Retail - Stores, warehouse and amortisation of goodwill 25.1 20.9 +20.1

Sports Retail – Change in estimated useful life – fixtures & fittings 2.5 2.5 -

Total Sports Retail 27.6 23.4 +17.9

Premium Lifestyle 1.6 1.8 -11.1

Brands 3.8 3.2 +18.8

Total 33.0 28.4 +16.2

FY13: The useful life of fixtures and fittings was reduced from 8 years to 7 years

FY14: The useful life of fixtures and fittings was reduced from 7 years to 6 years

FY15: The useful life of fixtures and fittings has been reduced from 6 years to 5 years, and the

depreciation policy has been changed from reducing balance to straight line

FY15 H1: Depreciation & Amortisation


FY15 H1

(£m)

FY14 H1

(£m)

Reported PBT 149.7 143.1

Standard rate of corporation tax (1) 31.4 32.9

Non-qualifying depreciation 1.9 2.9

Other differences 1.1 -

Effective tax 34.4 35.8

Actual effective tax rate 23.0% 25.0%

FY15 H1: Taxation

(1) The standard rate of corporation tax was 21% in FY15 H1 (FY14 H1: 23%)


FY15 H1: Cash Flow

(1) Acquisitions in FY14 include EAG, SIG, Yeomans and Gelert

(2) The purchase of EAG included 12 properties with a book value of £67.6 million

(3) Listed investment acquired in FY15 H1 relates to Debenhams


FY15 H1

(£m)

FY14 H1

(£m)

EBITDA (pre scheme costs) 203.1 183.3

Realised (loss) / profit on FX contracts (7.7) (0.6)

Taxes paid (33.9) (35.8)

Underlying free cash flow 161.5 146.9

Working capital

Inventory (89.6) (49.3)

Debtors / Creditors, Other (2.2) 31.8

Acquisitions (including debt) (1) (2) (2.3) (124.1)

Net (purchase of) / proceeds from investments (3) (33.2) -

Investment income received 1.3 1.3

Capital expenditure (26.7) (31.8)

Proceeds from sale of freehold properties inc. warehouses 21.1 -

Finance costs paid (4.4) (4.1)

Decrease / (Increase) in net debt 25.5 (29.3)

FY15 H1

(£m)

FY14 H1

(£m)

Freehold acquisitions 0.7 9.2

Warehouse and Shirebrook store expansion 3.4 4.4

New stores (leasehold) 9.5 8.0

Maintenance capex 5.2 3.4

Other 4.2 3.1

Sports Retail 23.0 28.1

Premium Lifestyle 1.6 1.9

Brands 2.1 1.8

26.7 31.8

Proceeds on disposal of Fixed Assets (21.1) -

Net Capital Expenditure 5.6 31.8

• FY15: target capital expenditure: c.£90m including commencement of Phase 3 of the Shirebrook extension

FY15 H1: Capital Expenditure


NE

T D

EB

T (

£M

)

• Investment in working capital, particularly product range and stock availability

212.0186.5

195.4(92.8)

(33.2)(26.7) 21.1 (4.4)

(33.9)

-100

-50

0

50

100

150

200

250Net Debt

27/04/2014EBITDA Working

capital &other

Purchase ofinvestment

CapitalExpenditure

Sale offreeholdproperty

Interest Tax Net Debt26/10/2014

FY15 H1: Net Debt Bridge


OPERATIONAL REVIEW

Sports Retail: UK Property


FY15

H1

FY14 H2 FY14

H1

UK Stores (3) 434 418 409

Openings 22 13 19

Closures 6 4 6

Freehold properties 60 59 58

SPORTSDIRECT.com

fascia

420 401 390

Retail Area (sq. ft.) c.4.5m(1) c. 4.5m c. 4.2m

(1) Due to differing methodologies, this implies a range between 4.25m sq. ft. – 4.75m sq. ft.

(2) Excluding Lillywhites Piccadilly

(3) Includes four concessions currently being trialled within Debenhams

• Square footage has remained at c. 4.5m sq. ft. (1)

• Continued enhancement of the store portfolio

• Leasehold expiry profile is now 5.0 years (2)

• 22 new stores opened in the period (3)

• 5 out of the 6 closures in FY15 have been

relocations into larger and better configured space

• Opening of our new Oxford Street store with c.

50,000 sq.ft.



Targets for FY15 include:

• Target c. 300,000 sq. ft. of existing space to be

refitted

• Target 30 – 40 store openings, 30% of which

are expected to be relocations

• Focus on further large format stores in key

markets

• Continued investment in specialist

performance areas

• Improved visual merchandising



Oxford Street relocation

• New Oxford Street store opened in May – c. 50,000 sq. ft.

• Enhanced in-store concepts

• Collaboration with key suppliers e.g. Nike, adidas and

Puma

Glasgow city centre extension

• Existing store trades 22,000 sq. ft. over 2 floors

• Extended total area will be c. 50,000 sq. ft. over 5 floors

• Expected to finish redevelopment in Spring 2015

Close to securing other large format city centre store

opportunities

Sports Retail: Fitness Division Update


• Acquired 18 former LA Fitness sites

• Aintree sports retail now open and gym due to

open by end of December

• 40,000 sq.ft. retail space over 2 floors

• A separate 20,000 sq.ft. dry gym

• Another two units opening in St Helens and

Keighley in early 2015


Existing territories No. of Stores

Austria 48

Belgium 44

Estonia (1) 37

Latvia (1) 24

Lithuania (1) 20

Slovenia 15

Portugal (2) 16

Poland 9

France 7

Germany 3

Holland 6

Cyprus 6

Hungary 5

Slovakia 3

Czech Republic 5

Luxembourg 2

Spain 1

Total 251

Sports Retail: International Overview

Associates No. of Stores

Rep. of Ireland (3) 26

Iceland (4) 1

Total 27

(1) Sports Direct owns a 60.0% stake



• Active in 19 European countries, including Iceland and Ireland

• Opening of Sports Direct store in Letňany, Czech Republic in co-operation with Tesco

• Expansion in the Baltics with new Ülemiste store (Estonia) opened in October under Sportsdirect.com fascia

• Opened eight stores in Europe, while closing four during the period

• Commenced Austrian integration:

• 18 stores in Austria now under Sportsdirect.com fascia

• c. 3.5m sq. ft. total retail space (5)

Letňany, Czech Republic

Ülemiste, Estonia


(5) Due to differing methodologies, this implies a range

between 3.25m sq. ft - 3.75m sq. ft.


Sports Stores: Austria Update

• Remaining 49% equity stake in Eybl and Sports Experts acquired in

March 2014

• Integration of Eybl stores only commenced in April 2014, following

acquisition of remaining equity stake

• Integration process includes significant re-configuration of historic

Eybl business model

• Discontinued low margin wholesale business

• Customer visits / footfall reliant on substantial marketing spend

• Operating costs exacerbated by number of specialist / niche

suppliers

• Sports Direct initiatives include:

• Sports Direct EPOS systems introduced to all stores

• Improve buying and merchandising disciplines

• UK training and retail support

• Supplier rationalisation, focused on building pan European

relationship with largest suppliers

• Continuing sell through of legacy stock

• Investment in core stock availability

• Category led merchandising lay-outs planned for mega stores

• €20 million of cost removed from EAG business over last two years

• Store rebranding options include retention of Eybl fascia for the

largest / mega stores

Vienna, North

Salzburg, Kassern


Sports Retail: Marketing Campaigns

• In October 2014 we helped adidas to launch

their NEO range of footwear in a pan -

European campaign via windows and in

store POS in over 700 doors and via our

digital platforms

• We revealed the latest ‘through the line’

Firetrap campaign on Halloween. The horror

inspired TV campaign was created by the

award winning director Ian John Powells.

The campaign has been carried further into

print, digital and retail executions

• Karrimor further enhanced its running

credentials by highlighting its winter range of

reflective clothing & footwear through retail

windows & print advertising


Sports Retail: Forever Sports Magazine

• In April 2014 we re-launched the Sports Direct

magazine as a stand alone Mens Sports &

Lifestyle title, Forever Sports

• The title is stocked in all major retailers

including Tesco, Sainsburys, WH Smiths and

ASDA as well as Sports Direct channels

• In the last ABC figures Forever Sports was

ranked the UK’s 2nd biggest selling Sports,

and 4th biggest Men’s Lifestyle magazine

• The magazine has also received Launch of

the Year and Magazine of the Year awards in

the 8 months since launch Pos Title ABC

1 Four Four Two 79,700

2 Forever Sports 62,277

3 National Club Golfer 59,000

4 Golf Monthly 48,212

Pos Title ABC

1 Mens Health 196,894

2 GQ 113,663

3 FHM 83,136

4 Forever Sports 62,277

5 Esquire 52,859

Source: ABC data, August 2014

Sports Ranking

Men’s Lifestyle Ranking

Online Sports Sales

Sports Retail: Online Overview

Overview


£80m

£174m

£112m

£265m

£159m

£335m

£176m

0

50

100

150

200

250

300

350

400

HY12 FY12 HY13 FY13 HY14 FY14 HY15

Ecommerce

• Click & collect has been trialled across c. 400 UK Sports

Direct stores

• Responsive design now fully implemented across all

platforms, including Sports Retail and Premium Lifestyle

• Gift cards launched online, purchase and redeem

• Improved foreign language sites, e.g. France and

Germany – significant reduction in ‘dropped baskets’

• Mobile (smart phone / tablet) now equates to 30% of

visits to sportsdirect.com

Objectives

• Developing ‘fast-pay’ check-out solution

• Introducing more European payments methods, e.g.

Ideal, Giro Pay and Sofort

• Developing credit facility

• Developing loyalty scheme, including annual fixed price

delivery options

• Developing ‘cross-platform’ click and collect solution

Premium Lifestyle

Store count

Fascia FY15 H1 FY14 H1

USC 80 81

Republic - 19

Cruise 10 9

Flannels 8 8

Van Mildert 9 10

Other 9 15

Total 116 142


• Rationalisation of USC business continues,

including closure of further 20 loss making stores

since the prior year

• Further progress made in mitigating operating

costs related to former Republic business

• Republic brands, including Soulcal, Fabric and

Crafted, continue to perform well at USC

• Supply from major 3rd party brands remains very

challenging

• Strong growth in online revenue

• Click & collect being trialled at all 80 USC stores

• Cruise and Van Mildert back-office functions

moving to Shirebrook head office

• Premium Karrimor K100 collection developed for

Cruise and Flannels

Brands: Wholesale


• Reduction in overall wholesale revenue of 4.4%

• US trading in line with expectations

• US now represents c. 40% of total wholesale

revenue

• Sales in Europe up 3.5% despite a tough market

• Wholesale gross margin up by 70 basis points

• Investment in key Group Brands expected to

continue at similar levels to previous years

Brands: Licensing


• Sports Direct Retail licensing continues to grow, as stores

open in South East Asia and the Middle East

• 29 new license agreements signed in H1 with guaranteed

minimum royalties of $12m over the contract period

• Everlast, Dunlop & Slazenger continue to drive potential

growth, representing c. 60% of total licensing income

between them

• Dunlop remains a key focus area for expansion into new

categories, notably automotive accessories - now 13 active

license agreements across new Dunlop categories

• Growth in Asia to continue, predominantly across the

Slazenger and Dunlop brands

• Licensing model still regarded as key driver of Brands

division growth and profitability

Lillywhites, Kuwait

Lillywhites, KuwaitSports Direct, Melaka, MalaysiaSports Direct, Melaka, Malaysia

FY15: Outlook Statement


• Results for the six months were solid considering the adverse impact of

• England’s early departure from the FIFA World Cup in Brazil

• Unseasonably mild weather during Autumn reducing footfall

• Trading since the period end has been in line with management’s expectations

• Performance continues to be driven by

• Investment in product range and availability

• Optimisation of in-store and web product offer

• Growing proportion of ‘better’ and ‘best’ Group branded products in key categories

Delivering exceptional quality and unbeatable value to our customers

• Certain of achieving the final EBITDA target of £300m (before share scheme charges) under the 2011 Employee

Bonus Share Scheme

• Consistent with previous guidance, the Board remains confident of achieving at least our full year internal

underlying EBITDA target of £360m(1)

(1) Excluding the Employee Bonus Share Scheme charges

QUESTIONS?

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