Sports Direct Financial Situation Analysis and Their New Project Investment in Morocco

5386 Words Aug 12th, 2010 22 Pages
INTRODUCTION: 3 PART I: COMPANY ANALYSIS 5 1- Introduction of the company 5 1.1 History: 5 1.2. The industry: 5 1.3. Sports Direct today: 6 2. Analysis on the financing structure of the company 6 2.1. Sports Direct financial statements: 7 2.2. JJB Sports financial statements: 9 2.3. Ratios of Sports Direct and JJB Sports 12 3. The weighted average cost of capital 15 3.1. Cost of equity: 15 3.2. Cost of debt: 15 3.3. WACC: 16 PART II: PROJECT INVESTMENT ANALYSIS 17 1- Preliminary report: 17 1.1. Project description: 17 1.2. Elements of the project: 18 1.3. Risk and Uncertainty: 19 1.4. Conclusion: 19 2. Project evaluation: 20 2.1. NPV: 20 2.2. Sensitivity analysis: 21 3. …show more content…
And finally a quarterly report will be prepared to compare the forecasted with the actual results.

PART I: COMPANY ANALYSIS

1- Introduction of the company 1.1 History:

In 1982 a store in Maidenhead is opened by Mike Ashley. It’s the birth of Sports Direct. However this name was not the first one. Indeed, it was called primarily Mike Ashley Sports. In the 1990s, the founder opened many stores in and around London and over 100 stores across the United Kingdom. By that time, the name of the chain was changed to Sports Soccer. Although the high number of stores, Mike Ashley was a sole trader and his chain did not acquire the company status until 1999. By doing so, the borrowing power of the company increased and in 2002 he went on to buy Lillywhites, the prestigious sports shop in Piccadilly Circus. In 2005, Sports Direct acquired Hargreaves, Gilesports, Streetwise in 2006, and Field&Trek in 2007(History of the Company. Sportsdirect.com). In this same year, Sports Direct’s shares were listed on the London Stock Exchange and by 2009, Sports Direct operated 470 stores(Annual Report 2009) in the UK. 1.2. The industry: Sports Direct operates as a retailer in the industry of sporting, leisure clothing, footwear and equipment. There are very lucrative niches for functional apparel in this industry particularly for football, tennis, and golf,