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Sports Direct's Profits Plunge By Nearly 60%, But Mike Ashley Says It Remains On Track

Retailer Sports Direct's annual profits "plunged" by nearly 60% as a result of the fall in the pound and "tough competition," according to Dierdre Hipwell of the LONDON TIMES. But Founder Mike Ashley claimed that it was "still on track" to become the "Selfridges" of sport. Britain's largest sportswear retailer said that its underlying profits had fallen by 58.7% to £113.7M in the year to the end of April on revenue that was up nearly 12% at just over £3.2B. Sports Direct, "which buys many of its products in dollars, had already warned that profits would be hit by its failure to hedge against currency swings" and its subsequent "belated and botched attempt" to hedge itself. It also announced that it "finally found" a CFO. Jon Kempster, previously from Wincanton and Utilitywise, "will fill a role that has been vacant for three years." Ashley said, "We have invested over £300 million ($389M) in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations. We will continue to invest" (LONDON TIMES, 7/20). In London, Mark Vandevelde reported "although best known for running chaotic, dingy stores on shabby high streets," Sports Direct has lately favored bigger shops in "smarter" neighborhoods. Its least popular "flagship" store was "still twice as profitable as an average location," the company said. The new openings "attracted brands including Asics." Sports Direct’s share price gained 7.5% in morning London trading on Thursday, reaching 323p, in a sign of shareholders' "relief that the announcement revealed no unexpected setbacks" after a year of "lurid allegations surrounding the company's treatment of workers" and the business practices of Ashley (FINANCIAL TIMES, 7/20). In London, Ashley Armstrong reported statutory profits fell by 22.2% to £281.6M "despite being boosted slightly" by Sports Direct selling all its interest in its "better-performing" rival JD Sports for £141.5M of profit. U.K. sales rose by 6.3% to £2.1B. Excluding the "numerous acquisitions the company made during the year -- including Irish department store chain Heatons -- and an extra week of trading," sales were "only up" by 2.6% (TELEGRAPH, 7/20).

IMAGE PROBLEM: THE DRUM's John McCarthy reported research from the Reputation Institute "has partially linked" Sports Direct's "misfortune" to Ashley's reputation. Workplace "scandals, issues around the group allegedly spying on inspectors and more" saw the public's view of Sports Direct's workplace and leadership decline 16 points to 27 out of 100 and 14 points to 42, respectively. Notably, the company "upped its products and services reputation from 57.1 to 64.2," bringing it into the "average" category on that front (THE DRUM, 7/20).

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