Sports Direct To Report Pre-Tax Profits Of Less Than Half Last Year's Total, Analysts Say
Sports Direct is "braced for a collapse in annual profits after a torrid year in which it has been battered by the fall in sterling since the Brexit vote and harried by corporate governance concerns," according to Oliver Shah of the SUNDAY TIMES. The discount retailer of trainers and tracksuits is set to report pre-tax profits of "less than half" last year's £275.2M, according to analysts. Sports Direct, which sources most of its products from Asia in dollars, "was not hedged against currency swings before last summer's vote sent the pound crashing." It then "botched a belated attempt to hedge itself." The results, due on Thursday, will be preceded by a High Court judgment in a case brought against Sports Direct Founder Mike Ashley by Jeff Blue, a former investment banker. Blue, who worked as an adviser to Ashley, claimed he was owed £14M from a bonus deal struck in a London pub in '13. Ashley denied making any agreement and called Blue a "total liar" (SUNDAY TIMES, 7/16). In London, Ashley Armstrong reported sales are "expected to have risen" from £2.8B to £3.2B ($4.2B) "on the back of new store openings." Trading has been "overshadowed by a whirlwind of negative publicity" following last year's investigation into its treatment of workers. For the last 12 months, Sports Direct's shares have been trading at levels not seen since the "dark days that followed its disastrous stock market float" in '07. Investment firm Peel Hunt analyst Jonathan Pritchard said that he expects gross margins to be "down a mile, mostly a function of the costly currency" (TELEGRAPH, 7/15).