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Principale » Sports Direct profits drop by nearly 60% as pound sterling slump bites

Sports Direct profits drop by nearly 60% as pound sterling slump bites

20 Juillet 2017

Pre-tax profits at Sports Direct have fallen to a six-year low as the pound took its toll, it revealed today - but shares rose as founder Mike Ashley named a new finance boss.

Profits at Sports Direct plunged by 58.7 per cent to £113.7 million in the year to April 30, becoming one of the high street's worst victims of the tumbling sterling since the Brexit referendum.

Chief Executive Mike Ashley said the board will continue to invest and make decisions for the long term, while trying to conservatively manage the currency volatility.

It said its outlook was "optimistic" and it was targeting growth in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 5 percent to 15 percent in the current 2017-18 year.

Ashley said that while Sports Direct has taken action to limit the impact of the pound's plummeting value against the U.S. dollar, he warned "we remain exposed" to longer-term economic woes.

The billionaire said: "Sports Direct is on course to become the "Selfridges" of sport by migrating to a new generation of stores to showcase the very best products from our third party brand partners".

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.

Ashley added that the FTSE 250 group was in the middle of revamping its stores "to become the "Selfridges" of sport".

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The 52-year-old tycoon has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub, with Mr Ashley still awaiting the verdict.

Prior to that, Sports Direct endured negative press coverage over its alleged working practices at its Shirebrook headquarters in Derbyshire, which saw Ashley being questioned by MPs in an inquiry.

The group said on reporting results that it had "made positive progress across the business as we continue to strive to ensure that all of our people are treated with dignity and respect".

The saga culminated in Mr Ashley twice saving chairman Keith Hellawell from the axe through his voting rights.

He has also bought stakes in Debenhams, French Connection and Findel.

Sport's Direct full-year report also came with the announcement that Jon Kempster from supply chain firm Wincanton has been appointed as the new chief financial officer.

His appointment follows a string of senior departures at the group, with former chief executive Dave Forsey quitting a year ago - only to be replaced by Mr Ashley.

Sports Direct profits drop by nearly 60% as pound sterling slump bites