Slump in sterling hits first half profits at Sports Direct - but group still orders new corporate jet
- Credit: PA
First half profits at embattled retailer Sports Direct have taken a pounding following the fall in the value of sterling – but that has not stopped the firm, led by billionaire owner Mike Ashley, splashing out on a new corporate jet.
Sports Direct said yesterday that underlying earnings plunged 33.5% to £145.3m in the 26 weeks to October 23, and slumped even further on a pre-tax basis, by 57% to £71.6m.
The company, which has endured a long list of controversies over working practices in past few months, compounded its PR problems by failing to hedge against the fall in the value of the pound in the immediate aftermath of the EU referendum.
Mr Ashley said: “The last six months have been tough for our people and performance. Our UK sports retail business continues to be the engine of Sports Direct, but our results have been affected by the significant deterioration in exchange rates, and our assessment of our risk relating to our stock levels and European stores performance.”
The company said revenue rose 14% to £1.6bn in the first half, but warned of a challenging environment which it expects to continue into the “foreseeable future”.
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Nevertheless, the half year results also reveal that, in order to “facilitate efficiencies”, Sports Direct will be taking delivery of a corporate plane in the coming weeks at a cost of £40m, in addition to a helicopter it already uses “on a regular basis”.
The news comes after a string of controversies for the firm which has seen Mr Ashley hauled before MPs to be grilled over working conditions.
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But he said yesterday: “What matters most to me is how tough the last year has been for the people who work at Sports Direct. Our people have once again found themselves in the spotlight through no fault of their own, yet they remain hard-working and loyal.”
And chairman Keith Hellawell, a former police chief, lashed out at what he called an “extreme” campaign against the company and said it was affecting performance.
“I have no doubt that the extreme political, union and media campaign waged against this company has not only damaged its reputation and influenced our customers, it has impacted negatively on the morale of our people.” he said. “I begin to question whether this intense scrutiny is all ethically motivated.”