Sports Direct profits drop to £113.7m on pound's plunge
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, which has 16 stores in Norrthern Ireland, reported a 58.7% tumble in underlying pre-tax profits to £113.7m for the year to April 30.
Mike Ashley, who founded the Sports Direct chain and is also owner of Newcastle United, said the group had taken action to limit the impact of the pound's heavy falls against the dollar, but warned "we remain exposed" to longer-term sterling woes.
The group, which sources many of its branded goods in dollars from Asia, said it was "optimistic" for the year ahead, targeting underlying earnings growth of between 5% and 15% despite ongoing pressure from the pound.
It said the rollout of a new store format was bearing fruit, with better than expected early results.
Mr 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 (earnings), particularly given the continued uncertainty surrounding Brexit."
Like-for-like retail sales edged 0.3% higher over the year, while total revenues rose 11.7% as its international sales benefited from a weaker pound.
Sports Direct warned after last June'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 Mr 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 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.
The group said 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".