Sports Direct axes dividend as profit falls

By James Davey

LONDON (Reuters) - The country's biggest sporting goods retailer, Sports Direct (SPD.L), scrapped its final dividend to reduce its debt burden after full-year core earnings fell 9 percent, but forecast earnings would rise in 2009/10.

Chief Executive Dave Forsey told reporters on Thursday axing the dividend would save the group 14 million pounds and go some way to achieving its target of net debt below 400 million pounds by the end of April 2010.

The cut means billionaire Mike Ashley, who owns 71 percent of Sports Direct, will be nearly 10 million pounds poorer.

Ashley, who made 929 million pounds from Sports Direct's flotation in 2007, also owns Newcastle United soccer club. He is trying to sell the outfit, relegated from England's Premier League to the second-tier Championship in May, but is struggling to find a buyer for a reported 100 million pounds.

Shares in Sports Direct, which floated at 300 pence, were trading down 0.25 pence at 81.75 pence at 0953 GMT (10:53 a.m. British time), valuing the business at 467 million pounds.

"The board is confident that our initiatives and hard work across all areas of the group leave us well positioned for the next phase of growth," said CEO Forsey.

Sports Direct, which trades from 359 stores in the UK and 63 overseas, made underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 136.8 million pounds in the year to April 26 2009, just beating its own guidance, and Forsey said that figure was expected to rise to "at least" 140 million pounds in the 2009/10 year.

STAFF BONUS SCHEME