Sports Direct profits crumble as Ashley bemoans ‘tough’ year

Profits have plummeted at troubled retailer Sports Direct in the first half of its financial year, the firm revealed this morning, as its chairman said that it is about to take delivery of a new corporate aeroplane.

For the six months to 23 October, underlying profits before tax nosedived by 57% – from £166.4m in 2015 to £71.6m this year. This was despite Group revenue soaring by 14.2% to £1.64bn over the period.

Shirebrook-based Sports Direct, which has lurched from crisis to crisis this year, said: “The significant events over the last year have been tough on our people and morale – our people are our number one priority over the long term.”

Despite this, the firm says it has ambitions for its UK retail arm to become “the Selfridges of sports retail, but that it expects “existing strategic challenges and currency headwinds facing the Group to continue to adversely impact financial performance over the medium term”.

Mike Ashley, 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.”

Meanwhile, non-executive chairman Keith Hellawell revealed that Sports Direct is about to take delivery of a new corporate aeroplane. In a statement, he says  it is “to facilitate efficiencies relating to the use of management time and the pursuit of the Group’s strategic priorities.”

In a strongly-worded summary, Hellawell said: “I have no doubt that the extreme political, union and media campaign waged against this company has not only damaged its reputation and influenced our customers, it has impacted negatively on the morale of our people. I begin to question whether this intense scrutiny is all ethically motivated.

“One of the most damaging consequences has been for the very people our critics supposedly support. The Board accepts responsibility for our shortcomings, but there has also been disproportionate, inaccurate and misleading commentary. The individuals at the heart of our organisation are blameless. They are increasingly upset and angry at the barrage of detrimental comments about the company which in their view is unjustified.

“On behalf of the Board I thank every member of staff for their continued loyalty during such testing times. We recognise the massive contribution you have made to the success of this Company and look forward to less stressful times.”