Sports Direct warns on profits after tough Christmas

Sports Direct was hit by tough festive trading. Picture: Lisa Ferguson
Sports Direct was hit by tough festive trading. Picture: Lisa Ferguson
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Sportswear retailer Sports Direct has warned that its full-year profits are likely to fall short of target, less than a month after telling investors it was confident of hitting the goal.

The firm, controlled by Newcastle United owner Mike Ashley, said it has seen a “deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period”.

As a result, the company said it was “no longer confident” of meeting its target to deliver annual underlying earnings of £420 million, before the cost of its bonus share scheme for workers.

READ MORE: Sports Direct to pay national minimum wage to its employees

“In light of these factors, and in anticipation of similar trading conditions between now and the end of April, management’s current expectation for the full year is for adjusted underlying Ebitda (before share scheme costs) of between £380m and £420m,” Sports Direct added.

The chain, which runs about 400 stores across the UK, last month posted half-year results showing a 25.1 per cent jump in pre-tax profits to £187.3m for the six months to 25 October, on group revenues 0.1 per cent higher at £1.4 billion.

At the time, the group told investors that was “confident” of achieving its £420m full-year earnings target.

Its earnings alert comes after Marks & Spencer reported a 5.8 per cent slide in like-for-like general merchandise sales for the 13 weeks to 26 December, in part blamed on “unseasonal conditions”. The high street bellwether also announced that chief executive Marc Bolland is to retire in April after six years at the helm.

READ MORE: M&S boss Marc Bolland to retire as clothing sales fall

Adding to the gloomy mood on the high street, fashion retailer Next this week revealed a shock 0.5 per cent fall in sales across its 540 UK stores during the two months to Christmas Eve.

Discount retailer Poundland yesterday issued a profit warning as it said UK footfall remained below last year’s levels, affecting overall sales growth.