Sports Direct warns 'extreme movements' in pound will hit profits
Mike Ashley's Sports Direct has warned that "extreme movements" in the pound will result in lower full year profits.
In an unscheduled trading update, the company said that full year earnings are expected to come in at £285 million, compared to the £300 million it had originally pencilled in.
The retailer said: "In light of recent downward currency movements, the company entered into a hedging arrangement with respect to the GBP/USD rate.
"Extreme movements overnight resulted in a crystallisation of that rate at 1.19, resulting in a negative impact of approximately £15 million on the company's FY17 underlying EBITDA expectation."
The company also warned that if the pound/dollar rate is 1.20 US dollars on average for the remainder of the year, then earnings could take another £20 million hit.
A "flash crash" sent the pound plunging more than 6% against the US dollar last night, with the value of sterling diving during the Asian trading session to 1.18 US dollars, hitting fresh 31-year lows before recovering.
Concerns have been raised over the fact that Sports Direct still only employs an acting finance chief, Matt Pearson, and has not moved to appoint anyone on a permanent basis.
Shares were down 9.6% in afternoon trading.
The profit warning comes after a string of controversies for the firm which has seen billionaire Mr 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 - only to be replaced by Mr Ashley.
This is on top of a shareholder rebellion against chairman Keith Hellawell.