Embattled retailer Sports Direct has announced a 57% fall in underlying pre-tax profits to £71.6m after a “tough” six months.
Group EBITDA fell 33.5% to £145.3m in the 26 weeks to 23 October, compared with the same period in 2015.
Sports Direct said the drop in underlying profits was caused by increased investment in staff, the devaluation of the pound and an increased inventory provision. The results come after Sports Direct issued a profit warning for 2017, in October.
The company described the past year, during which the retailer came under scrutiny from MPs over working conditions in its Shirebrook warehouse, as “tough on our people and morale”, and said its employees are the company’s number one priority over the long term.
Group revenue was up 14.2% to £1.64bn. Excluding the acquisition of Irish retailer Heatons and on a currency neutral basis, group revenue was up 4.2%.
Revenue in the UK sports retail division – which accounts for 67% of group revenue – was up 7.4% to £1.11bn on a reported basis, including wholesale. However, revenue in the company’s premium lifestyle division, which includes USC and Flannels, fell 4.9% to £83m.
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 hard working 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.”
Alongside its financial results, Sports Direct also announced the appointment of David Brayshaw as a non-executive director.
Brayshaw has previously worked at HSBC, Citigroup and Pilkington. He has joined the Sports Direct board and company audit committee with immediate effect.
Sports Direct said it would be taking delivery of a corporate plane in the coming weeks, which cost $51.1m (£40.5m) for the use of its management team. The new plane joins an existing corporate helicopter and a fleet of corporate vehicles, which are used to visit its sites across the UK.
The firm also confirmed it has entered an agreement with Double Take, a company owned by Ashley’s Mash Holdings where his daughter Matilda is a director, to license the cosmetic brand Sport Fx.