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You can find the current article at its original source at https://www.theguardian.com/business/2016/jul/07/sports-direct-not-going-private-in-near-future-says-mike-ashley
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| Sports Direct profits fall as Brexit worries weigh | Sports Direct profits fall as Brexit worries weigh |
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| Mike Ashley has told the Sports Direct board that he has no current intention to take the company private, as the retailer revealed a “disappointing” fall in profits. Dave Forsey, the chief executive, said: “The group has delivered a disappointing full-year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses.” | Mike Ashley has told the Sports Direct board that he has no current intention to take the company private, as the retailer revealed a “disappointing” fall in profits. Dave Forsey, the chief executive, said: “The group has delivered a disappointing full-year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses.” |
| He said trading in the runup to the EU referendum had been in line with expectations, but warned that there could be no certainty on profit levels for the coming year as the outlook was “somewhat uncertain and hard to predict” in the light of the UK’s decision to exit the EU. | He said trading in the runup to the EU referendum had been in line with expectations, but warned that there could be no certainty on profit levels for the coming year as the outlook was “somewhat uncertain and hard to predict” in the light of the UK’s decision to exit the EU. |
| Sports Direct had already warned that its profits for the year ahead could be affected by the drop in the value of the pound against the dollar, which it uses to buy stock in Asia, but on Thursday it outlined the detail. | Sports Direct had already warned that its profits for the year ahead could be affected by the drop in the value of the pound against the dollar, which it uses to buy stock in Asia, but on Thursday it outlined the detail. |
| Analysts at Jefferies said the “margin pain could prove pretty remarkable” for Sports Direct, as it had just finished a two-year deal under which it bought dollars at $1.70 to the pound. With sterling now trading at $1.30, the cost of buying about half the retailer’s goods abroad will increase by more than 20%. Sports Direct also warned that a 10% fall in the value of the pound against the euro would result in a £65m loss on hedging contracts Sports Direct had taken out. | Analysts at Jefferies said the “margin pain could prove pretty remarkable” for Sports Direct, as it had just finished a two-year deal under which it bought dollars at $1.70 to the pound. With sterling now trading at $1.30, the cost of buying about half the retailer’s goods abroad will increase by more than 20%. Sports Direct also warned that a 10% fall in the value of the pound against the euro would result in a £65m loss on hedging contracts Sports Direct had taken out. |
| Forsey added that Brexit was also likely to hit sales. “Since the EU vote, we expect the current political uncertainty – and potential weakness in the UK’s short- to medium-term economic outlook – is likely to act as a continuing drag on consumer confidence,” he said. | Forsey added that Brexit was also likely to hit sales. “Since the EU vote, we expect the current political uncertainty – and potential weakness in the UK’s short- to medium-term economic outlook – is likely to act as a continuing drag on consumer confidence,” he said. |
| Despite the gloomy outlook, Sports Direct’s shares rose 2.4% to 281p. The price was boosted by news that the group is considering launching a share buyback scheme amid volatility in equity markets following the Brexit vote. | Despite the gloomy outlook, Sports Direct’s shares rose 2.4% to 281p. The price was boosted by news that the group is considering launching a share buyback scheme amid volatility in equity markets following the Brexit vote. |
| In bad news for Sports Direct staff, the retailer confirmed that it would not be paying a bonus after underlying profits, at £381.4m, missed the company’s target of £420m in the year to 24 April. The bonus plan would have paid out £200m in shares to 3,000 permanent staff if earnings doubled by 2019. Forsey said Sports Direct would be looking to develop a replacement scheme to reward staff. | In bad news for Sports Direct staff, the retailer confirmed that it would not be paying a bonus after underlying profits, at £381.4m, missed the company’s target of £420m in the year to 24 April. The bonus plan would have paid out £200m in shares to 3,000 permanent staff if earnings doubled by 2019. Forsey said Sports Direct would be looking to develop a replacement scheme to reward staff. |
| Group sales rose 2.5% to £2.9bn, slightly better than expected, after Sports Direct bought the Irish Heatons chain. Analysts said this indicated that sales at established stores had fallen in the second half of the year. | Group sales rose 2.5% to £2.9bn, slightly better than expected, after Sports Direct bought the Irish Heatons chain. Analysts said this indicated that sales at established stores had fallen in the second half of the year. |
| Profit margins rose for the group as a whole as it booked big increases at its brands and premium lifestyle chains, which include the USC and Flannels chains. However, margins at the group’s sports stores decreased by 1 percentage point in the second half of the year as the company was forced to discount to clear winter stock during unseasonably warm weather. At the pretax level, full-year profits fell 8.4% to £275.2m. | Profit margins rose for the group as a whole as it booked big increases at its brands and premium lifestyle chains, which include the USC and Flannels chains. However, margins at the group’s sports stores decreased by 1 percentage point in the second half of the year as the company was forced to discount to clear winter stock during unseasonably warm weather. At the pretax level, full-year profits fell 8.4% to £275.2m. |
| Andrew Hall, an analyst at Verdict Retail, said: “The swirling market conditions and the harsh glare of the media spotlight are illuminating the cracks in Sports Direct’s performance, even as it continues to invest in its multichannel proposition. There are few positives for Sports Direct to take from this morning’s results, and strong leadership to right the ship is required to prevent the retailer lurching from one bad news story to another.” | Andrew Hall, an analyst at Verdict Retail, said: “The swirling market conditions and the harsh glare of the media spotlight are illuminating the cracks in Sports Direct’s performance, even as it continues to invest in its multichannel proposition. There are few positives for Sports Direct to take from this morning’s results, and strong leadership to right the ship is required to prevent the retailer lurching from one bad news story to another.” |
| Sales at the group’s sports stores, excluding Heatons, rose by just 0.6%, despite the opening of 60 new stores in 11 countries. Meanwhile, sales at its premium lifestyle chains slumped nearly 13% as the group closed lossmaking stores. | Sales at the group’s sports stores, excluding Heatons, rose by just 0.6%, despite the opening of 60 new stores in 11 countries. Meanwhile, sales at its premium lifestyle chains slumped nearly 13% as the group closed lossmaking stores. |
| In response to what it said was “repeated press speculation about his intentions with regards to his shareholding in Sports Direct”, the company said Ashley had confirmed to the board of directors that he had no current intention of taking the Sports Direct private, and had “indicated his willingness for the company to confirm this statement publicly”. | In response to what it said was “repeated press speculation about his intentions with regards to his shareholding in Sports Direct”, the company said Ashley had confirmed to the board of directors that he had no current intention of taking the Sports Direct private, and had “indicated his willingness for the company to confirm this statement publicly”. |
| The retailer has dropped out of the FTSE 100 after facing criticism over its treatment of workers, revealed by a Guardian investigation last year. It has also had difficulties in securing the acquisitions it needed to meet profit targets while sales growth has stumbled. The company issued its second profit warning in a year in March. | The retailer has dropped out of the FTSE 100 after facing criticism over its treatment of workers, revealed by a Guardian investigation last year. It has also had difficulties in securing the acquisitions it needed to meet profit targets while sales growth has stumbled. The company issued its second profit warning in a year in March. |
| Ashley admitted last month that Sports Direct had paid workers in its warehouse below the minimum wage because of delays in security searches of staff. Giving evidence to a committee of MPs in parliament, Ashley said he had already taken measures to address the problem and would be continuing his review into workers’ pay and conditions. | Ashley admitted last month that Sports Direct had paid workers in its warehouse below the minimum wage because of delays in security searches of staff. Giving evidence to a committee of MPs in parliament, Ashley said he had already taken measures to address the problem and would be continuing his review into workers’ pay and conditions. |
| In Thursday’s statement, there was no mention of Ashley’s pledge to MPs that he would look into the “six strikes and you’re out” policy under which workers are sacked for six black marks within six months. Nor was there any further update on the company’s policy of docking workers 15 minutes’ pay for being one minute late for work - something Ashley told MPs was “unacceptable”. | In Thursday’s statement, there was no mention of Ashley’s pledge to MPs that he would look into the “six strikes and you’re out” policy under which workers are sacked for six black marks within six months. Nor was there any further update on the company’s policy of docking workers 15 minutes’ pay for being one minute late for work - something Ashley told MPs was “unacceptable”. |
| HM Revenue & Customs, which polices minimum-wage abuses, is investigating the retailer, and the company is in talks with its full-time staff about a deal to offer back pay. | HM Revenue & Customs, which polices minimum-wage abuses, is investigating the retailer, and the company is in talks with its full-time staff about a deal to offer back pay. |