Mike Ashley’s Sports Direct has revealed annual profits more than halved after it was left exposed by the pound’s plunge following the Brexit vote.
The scandal-hit retailer reported a 58.7 per cent slump in underlying pre-tax profits to £113.7 million for the year to the end of April.
Newcastle United owner Ashley said the group had taken action to limit the impact of the pound’s heavy falls against the US dollar, but warned “we remain exposed” to longer-term sterling woes.
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Sports Direct, which sources many of its branded goods in US dollars from Asia, said it was “optimistic” for the year ahead, targeting underlying earnings growth of between 5 per cent and 15 per cent despite ongoing pressure from the pound.
It said the rollout of a new store format was bearing fruit, with better-than-expected early results.
Ashley said: “However, we will continue to be conservative in managing for the medium to long term, which may result in short-term fluctuations in underlying Ebitda, particularly given the continued uncertainty surrounding Brexit.”
Like-for-like retail sales edged 0.3 per cent higher over the year, while total revenues rose 11.7 per cent as its international sales benefited from weaker pound.
Sports Direct warned after last year’s EU referendum that profits would be hit because the company failed to hedge against the fall in sterling in the immediate aftermath of the vote, meaning the weak pound impacted its product-buying power.
Its financial troubles have come amid a storm of controversy surrounding Sports Direct and Ashley.
The 52-year-old tycoon has been embroiled in a court case this summer with an investment banker over a £15m deal allegedly struck in a London pub, with Ashley still awaiting the verdict.
It comes as Sports Direct also continues to recover from the damage to its reputation after allegations last year over working practices at its Shirebrook headquarters in Derbyshire, with Ashley hauled before MPs for a grilling.
The group said that it had “made positive progress across the business as we continue to strive to ensure that all of our people are treated with dignity and respect”.
Chairman Keith Hellawell insisted Sports Direct was a company of which “Britain can rightly feel very proud”.
Ashley said the group has “smashed the ball out of the park with the Selfridges of sport concept”, having been widening the reach of its stores by partnering with other brands.
As well as pumping more than £300m into new stores, he has snapped up a raft of stakes in struggling high street firms, most recently a 26 per cent holding in struggling Game Digital. He has also bought stakes in Debenhams, French Connection and Findel.
Sports Direct also announced it had appointed Jon Kempster as its new chief financial officer. His appointment follows a string of senior departures at the group, with former chief executive Dave Forsey quitting last year – only to be replaced by Ashley.