Sports Direct full-year profits plummet, new finance chief appointed

The sports specialist reported its worst full-year profit figues in six years today after it was hit by currency movements following the Brexit vote and depreciation charges.

Underlying pre-tax profits slumped 58.7% to £113.7m in the year to April 30, while group EBITDA fell 28.5% to £272.7m.

Commenting on sterling’s slump, chief executive Mike Ashley said: “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 and long-term currency fluctuations.”

Sales

Group sales were up 11.7% to £3.24bn.

In the UK, like-for-like sports retail sales were flat and overall sales grew 6.2% to £2.1bn. However, excluding acquisitions and a 53rd week, revenue increased 2.6%.

Sales at Sports Direct’s international division jumped 38% to £665m – up 5.9% on a currency neutral basis. But its international sports retail like-for-likes slipped 0.8%.

A confident Ashley reaffirmed his ambitions today to become the ‘Selfridges of sport’. He said the company had come closer to achieving this by “migrating to a new generation of stores to showcase the very best products”. 

“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,” he said. 

New finance chief

Following the resignation of Sports Direct’s acting chief financial officer Matt Pearson last year, the group has appointed Jon Kempster as its new chief financial officer.

Kempster, who joins from JVM group – a private company selling construction equipment – will take up the new post alongside boss Ashley on September 11.

The retailer said Kempster, has a “wealth of public company experience in multinational organisations across multiple sectors”, and “a strong track record of delivering operational performance transformation, corporate development and restructuring, strategy implementation and investor relations”.

He previously worked at logistics and distribution group Wincanton and industrial group Delta.

Eventful year

It’s been an eventful year for both Sports Direct and Ashley, with the business taking stakes in Game Digital and French Connection, and Ashley snapping up Agent Provocateur and increasing his stake in struggling department store chain Debenhams.

And it’s been a whirlwind few weeks for Ashley, with an appearance at the High Court over a £15m business deal that he insists was drunken “banter”.

The tycoon took the Sports Direct reins last September following Dave Forsey’s resignation as chief executive.

Earlier this year, Keith Hellawell was re-elected as chairman despite a shareholder revolt after being voted through by majority shareholder Ashley, and the retailer appointed a workers’ representative following a parliamentary inquiry into the working conditions of its staff.