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Sports Direct chain warns of challenging year ahead

Mike Ashley's Sports Direct business has cooled expectations for annual results despite seeing a sharp jump in profits at the half-year stage.

The owner of Sports World stores and brands including Slazenger and Donnay warned the early part of 2011 will be extremely challenging for all retailers, meaning it planned to stick by current targets for full-year earnings.

The company has more than 350 UK stores, the majority of which trade under the Sports fascia, with others branded Lillywhites, McGurks, Exsports, Gilesports and Hargreaves and Field & Trek.

It reported a strong trading performance for the six months to October 24, when profits should be significantly above a year ago. One City analyst suggested this could mean a rise of at least 30% to £93m.

Sports Direct said the boost from the World Cup in the first quarter had continued as group sales were up 5.4% to £295m in the nine weeks to September 26. Retail profits lifted 6.1% to £105m.

The sales figure is lower than the 8.8% rise seen in the first quarter but in line with expectations, Matthew McEachran of Singer Capital Markets added.

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