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Sports Direct reports sharp drop in profits

Sports Direct has reported a sharp drop in first half profits after what it described as a “tough” six months.

FASHION

Sports Direct reports sharp drop in profits

Sports Direct has reported a sharp drop in first half profits after what it described as a “tough” six months.

In the 26 weeks to 23 October, underlying pre-tax profit at the troubled retailer fell by 57% to £71 million. Group underlying EBITDA decreased by 33.5% to £145.3 million as the company suffered a deterioration in gross margin due to the weakened pound following the Brexit vote.

Group revenue increased by 4.2% on a currency neutral basis while UK sports retail revenue rose by 5.6%. International sports retail revenue climbed by 44.5%.

Mike Ashley, founder and chief executive of Sports Direct, said: "The last six months have been tough for our people and performance. Our UK sports retail business continues to be the engine of Sports Direct, but our results have been affected by the significant deterioration in exchange rates, and our assessment of our risk relating to our stock levels and European stores performance.

“We continue to elevate our sports retail proposition for our key third party brand partners and customers, as we progress towards our medium to long term goal of becoming the "Selfridges" of sports retail. We are changing our retail channels for customers in the UK, and we will be changing our approach to our customers in Europe, which will take time.”

“What matters most to me is how tough the last year has been for the people who work at Sports Direct. Our people have once again found themselves in the spotlight through no fault of their own, yet they remain hardworking and loyal. It is for this reason that my immediate priority will be to protect the people at Sports Direct. Part of this includes the company's commitment to underwrite the value of the share awards relating to the 2011 Share Scheme, that are vesting in September 2017, to reduce the impact of recent volatility on the financial outcomes for our people."

The company has also announced that it will be taking delivery of a corporate plane in the coming weeks “to facilitate efficiencies relating to the use of management time and the pursuit of the group's strategic priorities.”

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