Shares in Sports Direct fell 10% as a "slowdown in growth caused profits to miss expectations at the retailer controlled by Mike Ashley," according to Felsted & Campbell of the FINANCIAL TIMES. Sports retail sales were flat at £1.23B in the six months to Oct. 25, while sales in its “premium lifestyle fashion” division fell 12% following the closure of some loss making USC branded stores. Underlying profit rose from £160.6M to £166.4M, "which was below the consensus of analysts’ forecasts" of £180M. Statutory pre-tax profits climbed from £149.7M to £187.3M but these were "boosted" by more than £50M from the sale of 5 million shares in rival JD Sports in October. The "disappointing earnings" come a day after the London Guardian accused Sports Direct of paying staff below the minimum wage in “gulag” conditions. Sports Direct CEO Dave Forsey defended the company’s performance, saying that the retailer was "still growing faster than many rivals and was on track to meet its lowered target" of £420M of earnings before interest, tax, depreciation and amortization this year. But Peel Hunt Analyst Jonathan Pritchard said that Sports Direct had “lost touch with its customers.” Pritchard: "There's too much own-label product [especially clothing] in core stores, and a lack of ranging finesse in Europe." Royal London Asset Management Corporate Governance Manager Ashley Hamilton Claxton said, "Until the company improves both its governance and its relationships with employees, shareholders face substantial risks" (FT, 12/10).
