Sports Direct set to reveal profits slump after eventful year for owner Mike Ashley
PUBLISHED: 07:00 17 July 2017
Mike Ashley’s Sports Direct is expected to reveal a slump in profits this week after an eventful year for the scandal-hit retailer and following the tycoon’s high-profile court battle.
Annual results for the company on Thursday are forecast to show a painful hit from the pound after it was left exposed to sterling’s plunge following the Brexit vote.
Analysts at Liberum are expecting the results to show underlying pre-tax profits more than halving to £126 million from £275 million the previous year.
Sports Direct warned after last June’s EU referendum that profit would be hit because it failed to hedge against the fall in sterling in the immediate aftermath of the vote.
This was borne out in half-year results when pre-tax profits slumped 57% to £71.6 million.
The group has also cautioned of more profits woes to come as its key hedging position expired at the end of April, with no hedge in place for the following financial year.
Its financial troubles have come amid a storm of controversy surrounding Sports Direct and Mr Ashley.
The 52-year-old Newcastle United owner has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub.
The case provided a steady stream of headlines as lurid details were revealed of heavy drinking sessions and business meetings held in pubs.
The judge presiding over the case is expected to deliver a verdict imminently.
It comes as Sports Direct looks to recover from the damage to its reputation after allegations last year over working practices at its Shirebrook headquarters, with Mr Ashley hauled before MPs for a grilling.
A shambolic 2016 also saw it host a tumultuous “open day” at its headquarters, and its chief executive Dave Forsey quit - only to be replaced by Mr Ashley - followed by a string of other senior departures.
But the group has sought to fight back, with Mr Ashley snapping up a raft of stakes in struggling high street firms, most recently a 26% stake in Game Digital.
This latest purchase comes as part of Mr Ashley’s plans to become the “Selfridges of sports retail”, with shareholdings also held in Debenhams, French Connection and Findel.