Sports Direct profits slump after Brexit hit to pound

Profits at Mike Ashley's Sports Direct have plunged by a third following the collapse in sterling.

Sports Direct boss Mike Ashley said the past six months had been 'tough'. Picture: Joe Giddens/PA Wire
Sports Direct boss Mike Ashley said the past six months had been 'tough'. Picture: Joe Giddens/PA Wire

The retailer said underlying earnings slumped to £145.3 million for the six months to 23 October, down 33.5 per cent from the figure of £218.5m recorded for the same period last year.

Sports Direct, which has endured a long list of controversies over the past months, compounded its problems by failing to hedge against the fall in the value of the pound in the immediate aftermath of the EU referendum.

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The group warned that it expects “strategic challenges and currency headwinds” to continue to adversely affect its financial performance in the medium term.

Newcastle United owner Ashley, the chain’s founder and chief executive, 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 4.2 per cent to £1.6 billion, but warned of a challenging environment which the firm expects to continue into the “foreseeable future”. On a pre-tax basis, profits slumped 57 per cent to £71.6m.

Sports Direct also reiterated that Ashley has “no current intention to take the company private”.

The results come after a string of controversies for the firm, which has seen billionaire Ashley hauled before MPs to be grilled over working conditions, the company host a tumultuous “open day” at its headquarters, and its chief executive Dave Forsey quit.

Ashley sought to address the shambolic year through the trading statement, claiming again that he would like Sports Direct to become the “Selfridges of sports retail”.

He said: “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. It is for this reason that my immediate priority will be to protect the people at Sports Direct.”