Tracksuit tycoon takes £124m hit as shares slide

SportS Direct tycoon Mike Ashley has taken a £124m hit to his wealth after shares in the retailer he founded took a dive on the back of a damning broker note.

Analysts at Berenberg shot down Ashley’s ambition of creating the ‘Selfridges of Sport’, saying the idea lacked credibility and risked confusing customers about what Sports Direct actually offered.

And though the Newcastle United owner made a fortune out of selling cheap tracksuits and footballs, Berenberg thinks the brand is losing popularity among shoppers.

Analyst Graham Renwick said: ‘Sports Direct is, we believe, most exposed to the threat from Amazon. The online giant is already the second-most visited UK sports retailer and has forged encouraging partnerships with Nike and Adidas in the US.

‘Amazon is already better than Sports Direct on product range, price and convenience.’

To add insult to injury for Ashley, Renwick added that the millionaire’s company had the worst online site of any of its peers. Rival JD Sports has a much better website which brands want to appear on. He claimed Sports Direct had a ‘strained’ relationship with major brands such as Nike and Adidas as well, which could leave it vulnerable. Its shares tumbled by 11.6pc, or 37.6p, to 286.9p as investors followed Berenberg’s ‘sell’ recommendation. British American tobacco (BAT) was also having a terrible day of trading, as its shares plummeted amid reports that US regulators may ban menthol cigarettes. An outright prohibition would be a huge blow to BAT, since sales of the flavoured cigarettes in the US accounts for 20pc to 25pc of its group profits. But lawmakers are worried the products, which have a minty taste, are encouraging non-smokers to try cigarettes, resulting in more cases of addiction.

The US Food and Drug Administration, which regulates what products are allowed to be sold in America, has not formally confirmed it is planning to eliminate menthol cigarettes from the market.

Simon Cleverly, head of corporate affairs at BAT, said: ‘We believe the evidence shows menthol does not encourage people to smoke, make smoking harder to quit or increases the risks to health compared to cigarettes without menthol.’

Even if regulators do announce a ban, Cleverly said it would take several years for rules to come into force and it could even be challenged in court.

But shares still sank 10.6pc, or 352p, to 2962.5p, wiping £8.1bn off the company’s market value, and taking the shares to their lowest value in almost five years.

The rumours come at a challenging time for the tobacco industry. Companies such as BAT have been trying to develop alternatives to traditional cigarettes, such as vapes and products which heat rather than burn the tobacco, but these too have run into regulatory hurdles. The FDA also wants to ban flavoured e-cigarettes, which vaporise nicotine-infused liquid rather than burning tobacco, as it believes these encourage young people to smoke. BAT’s hefty falls dragged the

FtSE 100 down 0.74pc, or 52.26 points, to 7053.08.

Trouble for Apple also rocked one of London’s smaller companies, chip-maker IQE. The firm’s shares dipped to three-month lows as one of its Californian suppliers said a major customer – which traders assumed to be Apple – had slashed orders for components. A Japanese supplier separately issued a warning on sales.

This sparked fears that demand for iPhones was waning, and caused investors in IQE to predict the same thing might happen to the British company. IQE’s shares skidded 28.9pc, or 27.25p, to 67p.