CHALLENGES

Sports Direct has given an upbeat outlook for the year ahead after Britain’s biggest sporting goods and clothing retailer saw its earnings more than halve.

Results yesterday showed that pre-tax profits had tumbled 58.7 per cent to £113.7 million for the year to the end of April – a figure that was broadly in line with City forecasts.

Mike Ashley, Sports Direct’s plain-talking founder and chief executive, who also owns Newcastle United FC, said the group had taken action to limit the impact of the pound’s heavy falls against the dollar, but warned “we remain exposed” to longer-term sterling woes.

The chain, which sources many of its branded goods in dollars from Asia, said it was “optimistic” for the new financial year, targeting underlying earnings growth of between 5 per cent and 15 per cent despite ongoing pressure from the pound.

It said the rollout of a new store format was bearing fruit, with better-than-expected early results.

Ashley added: “We will con-

0 The company is Britain’s biggest sports clothing and equipment retailer

LAITH KHALAF, ANALYST tinue to be conservative in managing for the medium to long term, which may result in short-term fluctuations in underlying Ebitda [earnings], particularly given the continued uncertainty surrounding Brexit.”

Like-for-like retail sales edged 0.3 per cent higher over the year, while total revenues rose 11.7 per cent as its international sales benefited from the weaker pound.

Laith Khalaf, senior analyst at financial services group Hargreaves Lansdown, said: “The key culprit for a massive fall in profits is the weaker pound, which has decimated the retailer’s margin on sales.

“However much of this was already baked into expectations and management’s forecast of a rise in earnings next year has piqued the market’s interest.”

He added: “Sports Direct still faces challenging times. The retailer is trying to reinvent itself into the Selfridges of sports in the UK, while at the same time launching in the US, and fighting off concerns

“Sports Direct still faces challenging times. The retailer is trying to reinvent itself into the Selfridges of sports in the UK”