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| Version 1 | Version 2 |
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| How Sports Direct beat the opposition | How Sports Direct beat the opposition |
| (1 day later) | |
| The uninitiated shopper visiting Sports Direct's flagship store on Oxford Street in central London might wonder whether the company is suffering something of an identity crisis. | The uninitiated shopper visiting Sports Direct's flagship store on Oxford Street in central London might wonder whether the company is suffering something of an identity crisis. |
| It is crammed with traditional sporting kit - football shirts, trainers, swimsuits, track suits, as well as all manner of sporting paraphernalia. | It is crammed with traditional sporting kit - football shirts, trainers, swimsuits, track suits, as well as all manner of sporting paraphernalia. |
| Then just across the aisle hang jeans, T-shirts and even handbags. | Then just across the aisle hang jeans, T-shirts and even handbags. |
| It might look confusing, but there's no doubt the mix works. The firm's latest financial figures are testament to that, showing an 18% rise in sales in the three months to the end of July. | It might look confusing, but there's no doubt the mix works. The firm's latest financial figures are testament to that, showing an 18% rise in sales in the three months to the end of July. |
| Soaraway shares | Soaraway shares |
| Sports Direct is now worth about £4.3bn and destined to join the select band of the FTSE 100 - the index that charts the fortunes of the UK's biggest stock market-listed firms. | Sports Direct is now worth about £4.3bn and destined to join the select band of the FTSE 100 - the index that charts the fortunes of the UK's biggest stock market-listed firms. |
| The company's owner, billionaire Newcastle United owner Mike Ashley, took the firm public in February 2007 - straight into the maelstrom of global economic crisis. | The company's owner, billionaire Newcastle United owner Mike Ashley, took the firm public in February 2007 - straight into the maelstrom of global economic crisis. |
| The firm's shares had a torrid time to start with, but in a sign of things to come, began recovering in November 2008, about five months before the mainstream markets bottomed out and began clawing their way back up. | The firm's shares had a torrid time to start with, but in a sign of things to come, began recovering in November 2008, about five months before the mainstream markets bottomed out and began clawing their way back up. |
| Since then the way has, by and large, only been up. | Since then the way has, by and large, only been up. |
| Sports Direct's shares have risen 86% since the start of the year and the firm easily made it into the latest FTSE 100 reshuffle, which takes effect on 23 September. | |
| The firm is currently worth £250m more than its nearest FTSE 250 rival, Mondi. | The firm is currently worth £250m more than its nearest FTSE 250 rival, Mondi. |
| Mike van Dulken, head of research at Accendo Markets, said the firm's resilience stood out for investors. | Mike van Dulken, head of research at Accendo Markets, said the firm's resilience stood out for investors. |
| "Despite consumers being pinched, this business is still managing to grow profitability year in, year out," he says. | "Despite consumers being pinched, this business is still managing to grow profitability year in, year out," he says. |
| "Things have certainly been going the right way in terms of revenue, profitability and margins - and that is a great recipe for investors." | "Things have certainly been going the right way in terms of revenue, profitability and margins - and that is a great recipe for investors." |
| He points out that while the wider High Street has been moribund, margins at Sports Direct have gone from 7% at the end of April 2011 to an expected 10% when the company reports full-year results in April 2014. | He points out that while the wider High Street has been moribund, margins at Sports Direct have gone from 7% at the end of April 2011 to an expected 10% when the company reports full-year results in April 2014. |
| Pruning | Pruning |
| There are several reasons for Sports Direct's meteoric rise, not least the demise of rivals such as JJB Sports. | There are several reasons for Sports Direct's meteoric rise, not least the demise of rivals such as JJB Sports. |
| This leaves investors keen on getting into the sports retail sector with limited choice. | This leaves investors keen on getting into the sports retail sector with limited choice. |
| But Neil Saunders, managing director of retail analysts Conlumino, says Sports Direct has very much driven its own destiny. | But Neil Saunders, managing director of retail analysts Conlumino, says Sports Direct has very much driven its own destiny. |
| "The business is run very efficiently, it's very lean and has strong operational discipline," he says. | "The business is run very efficiently, it's very lean and has strong operational discipline," he says. |
| "They have tight control of suppliers and are very tight in terms of head office structure - there's no fat there at all." | "They have tight control of suppliers and are very tight in terms of head office structure - there's no fat there at all." |
| This approach allows Sport Direct to make a handsome profit, despite low prices and low margins. | This approach allows Sport Direct to make a handsome profit, despite low prices and low margins. |
| Mr Saunders adds that the firm displays a ruthless streak that some of its older rivals do not. | Mr Saunders adds that the firm displays a ruthless streak that some of its older rivals do not. |
| "It is very disciplined in reviewing the business and making tough decisions. If a store is proving too expensive, they will cut it from the portfolio. | "It is very disciplined in reviewing the business and making tough decisions. If a store is proving too expensive, they will cut it from the portfolio. |
| "That ongoing pruning stands in marked contrast to other retailers." | "That ongoing pruning stands in marked contrast to other retailers." |
| Piggybacking | Piggybacking |
| Sports Direct has started dabbling in international markets, having invested in Austria and the Baltic states through acquisitions. | Sports Direct has started dabbling in international markets, having invested in Austria and the Baltic states through acquisitions. |
| Analysts see this as an example of the firm's foresight. | Analysts see this as an example of the firm's foresight. |
| "Sports Direct's online and international expansion activities are appropriate responses to a market that has seen much consolidation," says John Pal, senior lecturer in retailing at Manchester Business School. | "Sports Direct's online and international expansion activities are appropriate responses to a market that has seen much consolidation," says John Pal, senior lecturer in retailing at Manchester Business School. |
| "It has seen off a number of competitors such as All Sports and JJB in the UK and is now a mature retailer." | "It has seen off a number of competitors such as All Sports and JJB in the UK and is now a mature retailer." |
| Neil Saunders adds that the firm has been clever not to rush into making international plans. | Neil Saunders adds that the firm has been clever not to rush into making international plans. |
| "Their offering is quite universal - it crosses borders, but there is a rule in retail that you don't bite off more than you can chew. | "Their offering is quite universal - it crosses borders, but there is a rule in retail that you don't bite off more than you can chew. |
| "You can be doing well in the home market, but that takes up a lot of management time and finances," he says. | "You can be doing well in the home market, but that takes up a lot of management time and finances," he says. |
| "If you look at too much in one go, it dilutes what you can do effectively and you end up doing nothing particularly well." | "If you look at too much in one go, it dilutes what you can do effectively and you end up doing nothing particularly well." |
| Instead, Sports Direct has built up economies of scale and logistics networks that Mr Saunders says the firm can piggyback on, while making it much easier to bolt on another country. | Instead, Sports Direct has built up economies of scale and logistics networks that Mr Saunders says the firm can piggyback on, while making it much easier to bolt on another country. |
| Bowler hat | Bowler hat |
| Once the firm is in the FTSE 100, institutional investors and funds that track the index will buy into its shares. | Once the firm is in the FTSE 100, institutional investors and funds that track the index will buy into its shares. |
| This has some wondering if the grandees of the investment world know what they are in for. | This has some wondering if the grandees of the investment world know what they are in for. |
| Mike Ashley is notoriously unforthcoming with investors, which is something these big hitters will be unused to. | Mike Ashley is notoriously unforthcoming with investors, which is something these big hitters will be unused to. |
| Whether he will be able to maintain this stance is unclear as yet. | Whether he will be able to maintain this stance is unclear as yet. |
| Elissa Bayer, investment director at Williams de Broe, says he probably will - for now. | Elissa Bayer, investment director at Williams de Broe, says he probably will - for now. |
| "I think the issue is, when you are doing well, investors will put up with a lot," she says. | "I think the issue is, when you are doing well, investors will put up with a lot," she says. |
| "If, for any reason, things go the other way, then investors will come down hard." | "If, for any reason, things go the other way, then investors will come down hard." |
| As things stand, Mr Ashley looks as though he will be able to maintain his splendid isolation. | As things stand, Mr Ashley looks as though he will be able to maintain his splendid isolation. |
| Analysts have pencilled in a 6.5% rise in revenues and a 20% rise in profits when the company reports full year results next April. | Analysts have pencilled in a 6.5% rise in revenues and a 20% rise in profits when the company reports full year results next April. |
| Which means we are unlikely to see Mike Ashley doffing his bowler hat to the City's big guns in the immediate future, at least. | Which means we are unlikely to see Mike Ashley doffing his bowler hat to the City's big guns in the immediate future, at least. |