Sports Direct can be Selfridges of sport, says Mike Ashley despite profits fall
Sports Direct has revealed annual profits tumbled by 59% after it was hit by the pound's plunge, but boss Mike Ashley insisted the group is still on track to become the " Selfridges of sport".
The retailer reported underlying pre-tax profits tumbling to £113.7 million for the year to April 30 after it was left exposed by the pound's heavy falls following the Brexit vote.
Shares in the group surged more than 10% despite the profits blow as it put faith in its new store format and said current year earnings are expected to grow by up to 15%.
It also cheered investors after appointing a permanent finance chief for the first time in four years, hiring Jon Kempster in the role.
Newcastle United owner Mr Ashley said the weak pound had had a "significant impact" on the year's results, as the group sources many of its branded goods in US dollars from Asia.
The firm has since taken action to limit the impact of the pound's heavy falls against the US dollar, although it cautioned "we remain exposed" to longer-term sterling woes.
Sports Direct warned after last June's EU referendum that profits would be knocked because the company failed to hedge against the fall in sterling in the immediate aftermath of the vote.
While it is expecting earnings to remain volatile amid " uncertainty surrounding Brexit", it is pencilling in growth of between 5% and 15% over the year ahead.
Mr Ashley said the chain had "smashed the ball out of the park with the Selfridges of sport concept".
He cheered better-than-expected trading in its new flagship stores as it teams up with third party brands.
The group has snapped up a raft of stakes in struggling high street firms, most recently a 26% holding in struggling Game Digital to add to holdings in Debenhams, French Connection and Findel.
The results also showed like-for-like retail sales edged 0.3% higher over the year, while total revenues rose 11.7% as its international sales benefited from the weaker pound.
The figures follow an eventful year for the group, with a storm of controversy surrounding Sports Direct and Mr Ashley.
The 52-year-old tycoon has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub, with Mr 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 Mr Ashley hauled before MPs for a grilling.
It has also seen a string of senior departures at the group, with former chief executive Dave Forsey quitting last year - only to be replaced by Mr Ashley.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said Sports Direct still faces "challenging times".
He added: "The retailer is trying to reinvent itself into the Selfridges of sports in the UK, while at the same time launching in the US, and fighting off concerns from shareholders and MPs about corporate governance and working conditions in the UK.
"All this while the weak pound is increasing costs, and the British consumer is facing rising inflation and weak wage growth, not a pretty combination for the price-sensitive shoppers who turn to Sports Direct for a bargain."