This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/nils-pratley-on-finance/2016/jan/08/sports-direct-profit-warning-easy-growth-seems-to-be-over

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Sports Direct's story of easy growth seems to be over Sports Direct's story of easy growth seems to be over
(34 minutes later)
Few of Sports Direct’s outside shareholders have ever been impressed by the company’s corporate governance but most have consoled themselves with a look at the share price. It went up in spectacular style for more than half a decade. You could have bought a slice in Mike Ashley’s creation at 50p in November 2008 and sold at 900p in April 2014. Few of Sports Direct’s external shareholders have ever been impressed by its corporate governance but most have consoled themselves with a look at the share price, which went up in spectacular style for more than half a decade. You could have bought a slice in Mike Ashley’s creation at 50p in November 2008 and sold at 900p in April 2014.
But now? Today’s profits warning – issued less than a month after half-year profits missed City forecasts – has taken the share price below 500p for the first time since mid-2013. That’s not a surprise because the statement, blaming slower sales on “unseasonal” weather and “a deterioration of trading conditions in the high street, raises more questions than it answers. But now? Friday’s profits warning – issued less than a month after half-year profits missed City forecasts – has taken the share price below 450p for the first time since mid-2013. That’s not a surprise because the statement, blaming slower sales on unseasonal weather and a deterioration of trading conditions in the high street, raises more questions than it answers.
Should a mild winter really upset trading at a sportswear chain? Sports Direct is not in the coats and jumpers business in the way that Marks & Spencer and Next are. Warm temperatures, in theory, might even encourage better sales of trainers and tracksuits than freezing conditions. Should a mild winter really upset trading at a sportswear chain? Sports Direct is not in the coats and jumpers business in the way that Marks & Spencer and Next are. Warm temperatures, in theory, might even encourage better sales of trainers and tracksuits than freezing conditions would.
Doesn’t Sports Direct have a strong online business to capture the switch to online shopping? And surely the weather hasn’t changed radically since management said four weeks ago it remained confident of achieving top-line profits of £420m in the current financial year; now it says anything between £380m and £420m is possible. Related: Sports Direct issues profit warning after poor Christmas sales
Doesn’t Sports Direct have a strong online business to capture the switch to online shopping? And surely the weather hasn’t changed radically since management said four weeks ago it remained confident of achieving profits of £420m in the current financial year; now it says anything between £380m and £420m is possible.
Some investors will worry that Sports Direct is suffering a consumer backlash after this paper’s reports on working practices at the Shirebrook warehouse in Derbyshire. Others may think competitors like JD Sports, once of the best stock market performers of last year, is taking chunks out of Sports Direct’s traditional trade.Some investors will worry that Sports Direct is suffering a consumer backlash after this paper’s reports on working practices at the Shirebrook warehouse in Derbyshire. Others may think competitors like JD Sports, once of the best stock market performers of last year, is taking chunks out of Sports Direct’s traditional trade.
Interestingly JD has not been suffering from weather-related problems: last month it issued a statement to the Stock Exchange to say its profits would be higher than expected. Interestingly JD has not been suffering from weather-related problems: last month it issued a statement to the Stock Exchange to say its profits would be higher than expected. Maybe Ashley is filling his stores with too many in-house brands.
Maybe Ashley is filling his stores with too many in-house brands.
Whatever the explanation, the story of easy growth seems to be over and shareholders’ patience with Ashley’s dabbling in the shares of other retailers – from Tesco, to Debenhams to Findel – is likely to be paper-thin.Whatever the explanation, the story of easy growth seems to be over and shareholders’ patience with Ashley’s dabbling in the shares of other retailers – from Tesco, to Debenhams to Findel – is likely to be paper-thin.
“Sports Direct makes a case for good corporate governance; shares 40% down since Aug and another warning. Weak #corpgov costs shareholders,” tweeted fund manager Colin McLean after today’s warning. “Sports Direct makes a case for good corporate governance; shares 40% down since Aug and another warning. Weak #corpgov costs shareholders,” tweeted fund manager Colin McLean after Friday’s warning.
The City’s view on Sports Direct is shifting fast.The City’s view on Sports Direct is shifting fast.