Sports Direct unveils potential £605m tax bill along with much-delayed results

Sports Direct, owned by retail tycoon Mike Ashley, had been due to release its full-year results today at 7am. Picture: Nick Ansell

The firm, which last year bought House of Fraser for £90 million, also said Belgian authorities are demanding €674m (£605m) in unpaid taxes. The company stated that it was “less than probable that material VAT and penalties will be due in Belgium as result of the tax audit” but the latest battle is expected to unnerve investors.

Additionally, chief executive Mike Ashley told investors at a meeting that there will be more House of Fraser closures in the short term. “Some of the stores lose money on zero rent,” he said.

Additionally, the firm’s chief finance officer Jon Kempster resigned “to pursue other interests”, and will be replaced by his deputy Chris Wootton.

The FTSE 250 business, which also owns Flannels, Evans Cycles and sofa.com among others, had originally been set to report its results on 18 July but this was deferred to 7am yesterday.

However, publication was repeatedly delayed during the day, to midday, then 2pm, later 4pm, and eventually emerging at about 5:20pm.

For the year to 28 April, the business reported that underlying core earnings fell 6 per cent to £287.8m, although the figure was up 10.9 per cent to £339.4m excluding House of Fraser.

Group revenue increased by 10.2 per cent to £3.7 billion.

Regarding House of Fraser, Sports Direct said it would give no financial guidance for this year and would have thought again at buying the department store.

On House of Fraser, Ashley said: “The previous chairman, Frank Slevin exemplified City greed and excess, and as House of Fraser’s future became terminal with people losing their jobs and with more to follow, Mr Slevin thought it suitable to retain these extravagances not appropriate to a business in its death spiral.”

Chairman David Daly’s commentary was more measured, saying: “We will see some great milestones achieved in the year ahead, with the Flannels flagship store opening and we will commence the work to shape the Frasers Glasgow store into what we believe will be a fantastic shopping experience for our customers and showcase our intentions for the remaining portfolio of stores.

“We would like to see some stability and certainty entering in to the wider economic environment, as at the date of writing it is not far off to say the political upheaval that has been going on in this financial year has been chaotic at best.

“It is an exciting time but we also recognise the significant challenge that House of Fraser brings, so we are cautious about the year ahead.”

Neil Wilson, chief market analyst at Markets.com, yesterday morning commented on the lack of update: “It’s a total and utter shambles, and betrays a number of problems at the business.”