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Sports Direct pre-tax profit plummets by nearly 60%

Profit at Sports Direct has tumbled after being hit by the weaker pound.

Underlying profit before tax fell by 59% to £113.7m in the 53 weeks to 30 April 2017.

Underlying EBITDA before share scheme costs was also hit, falling 28.5% to £273m.

Group sales climbed 11.7% to £3.2bn. Its UK sports retail business sales increased 6.3% to £2.1bn. Sales in premium lifestyle, which includes Flannels, grew 11.6%% to £202.2m.

Sports Direct has also announced it has hired Jon Kempster as its chief financial officer. Kempster, who has held roles including group finance director at logistics and distribution group Wincanton, will join the board in September.

In the meantime it has formed a strategic partnership with Japanese sportswear brand Asics, which will take space at Sports Direct’s flagship stores in early spring next year.

Chief executive Mike Ashley said the group has “smashed the ball out of the park with [the] ‘Selfridges’ of sport concept”.

Ashley 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. We have invested over £300m in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations.

“We will continue to invest and make decisions for the long term, whilst trying to conservatively manage the currency volatility that is reflected in our full year results. As previously announced, the devaluation of Sterling against the US dollar has led to a significant impact on EBITDA and profits in FY17. We have put in place hedging arrangements to minimise the short-term impact of currency volatility, but like many UK retailers we remain exposed to medium [to] long term currency fluctuations. Our results were also impacted by provisions and depreciation charges.

“I would like to thank all our people at Sports Direct for ensuring that we continue to move forward together whilst elevating our retail proposition.”

 

 

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