England's early exit from the World Cup cost Sports Direct up to £20m in lost profits, the group said, as disappointed football fans failed to buy replica shirts.
Dave Forsey, chief executive, said the lacklustre performance of Roy Hodgson's team in Brazil was much more significant to the business than a dispute with Adidas which meant Sports Direct could not stock replicas of the on-field strips of teams including the winners Germany and the runners-up Argentina. The brand has pulled stock from a number of different retailers, because it was unhappy at the presentation of goods or customer service.
"England's early exit meant a £10m to £20m swing to [underlying profits]," Forsey said. "It's all about England for the World Cup for our stores. What affects sales primarily will always be how long England lasts in the tournament."
While Sports Direct revealed a healthy 15.6% rise in pre-tax profits to £239.5m on sales of £2.7bn, up 23.8% in the year to 27 April, driven by strong sales of sportswear as well as the acquisition of fashion chain Republic, Forsey said performance would have been better if the England team had hit the back of the net more often.
However, Forsey said Sports Direct was hopeful of stocking the main Adidas football strips it wants, including Premier League team Chelsea's after "encouraging discussions" with the sports brand which stopped supplying certain strips to Sports Direct this year. Forsey was not able to confirm if and when Adidas might begin supply but he said:"Top-level engagement has been encouraging for the last couple of weeks and both teams see opportunities for their side."
Sports Direct is also seeking a rapprochement with shareholders after a bruising battle over the bonus scheme which would have significantly benefited the chain's founder, Mike Ashley. On Wednesday, the company said Ashley had chosen to withdraw from the scheme, two weeks after it had been approved. The move was widely welcomed by major institutional shareholders who felt the bonus arrangements were inappropriately structured. They want Ashley, who owns a 58% stake in the company but does not receive any pay for his role as executive deputy chairman, to be rewarded by a salary or a dividend that would benefit all investors. Shareholders had threatened to vote against the re-election of the chairman Keith Hellawell and some non-executive directors, but Forsey said their protests had not affected Ashley's decision.
"That was all around staff. He wouldn't want the team to feel that he was taking over shares and they would lose out. That was the only reason he came to his decision," Forsey said, adding that only the Sports Direct's board would decide when it is appropriate to pay a dividend. "We have always stated that we will use the cash we have got for future growth opportunities. If there comes a point that there aren't those future opportunities then the board would consider ways of returning cash to shareholders," he said.
For now, Sports Direct is upgrading its stores as part of the strategy to woo back Adidas and continues to look at acquisitions, although Forsey declined to comment on whether the company is interested in a bid for footwear chain Office, a move it previously said was not possible because of its disagreement with Adidas.