- Full-year profits fall 8.4% to £275.2m
- Group sales up 2.5% to £2.9bn
- Chief executive Dave Forsey admits it has been a “particularly tough year”
- Mike Ashley says he has no plans to take retailer private
Sports Direct has posted an 8.4% drop in annual pre-tax profits as boss Dave Forsey branded it a “disappointing” year.
The Mike-Ashley-controlled retailer revealed pre-tax-profits in the year to April 24 were £275.2m. Group sales rose 2.5% to £2.9bn.
Like-for-likes at its sports retail division fell 0.8% from trading at 531 stores.
Chief executive Dave Forsey 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.”
The retailer has endured a bumpy ride in the last 12 months with intense media scrutiny of its employment practices, which culminated in Ashley appearing before MPs to explain the firm’s conduct. He admitted staff at its Shirebrook warehouse had been effectively paid below the minimum wage due to lengthy security checks.
Sports Direct also moved to dampen press speculation that Ashley might take the retailer private. ”Mike Ashley has confirmed to the board of directors that he has no current intention of taking the company private,” it said.
At its sports retail division, total annual sales rose 3.9% to £2.5bn, helped by the acquisition of Irish department store Heatons.
Gross margins at the division fell to 43.6 from 44.6% the prior year due to “discounting required to clear excess winter stock”.
Store wages rose 4.7% to £250.5m but remained 10% of total sales.
During the year Sports Direct opened 60 new stores in 11 countries. Heatons operates 15 Sports Direct stores in Northern Ireland and 27 sports stores in the Republic of Ireland.
Sales in its ’premium lifestyle’ division, including Republic and Flannels, slid 12.7% to £181m.
On the impact of Brexit, Sports Direct said: “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.
It added: “When combined with the structural difficulties for UK retailers, including high street footfall, and our exposure to the weakness of the pound against the US dollar (these factors make the current outlook for FY17 somewhat uncertain and therefore hard to predict.”