Sports Direct fury at critics

THE chairman of Sports Direct has hit back at critics over a “damaging campaign” against the company as it warned of more financial pain after a 57 per cent drop in underlying half-year profit.

Keith Hellawell, pictured, said staff at the sportswear retailer, which has faced heavy scrutiny including by MPs amid concerns over its working practices and corporate governance, were “increasingly upset and angry” at the barrage of detrimental comments.

He added: “I have no doubt the extreme political, union and media campaign waged against this firm has not only damaged its reputation and influenced our customers, it has impacted negatively on the morale of our people. I wonder whether this intense scrutiny is all ethically motivated. The board accepts responsibility for our shortcomings, but there has also been disproportionate and misleading commentary.”

Sports Direct, founded by Newcastle United owner Mike Ashley, was hit hard by the weaker pound as it pays for its own-brand stock from Asia in dollars. Margins were also squeezed as it stepped up discounting to clear stock.

Underlying pre-tax profit fell to £71.6million from £166.4million. Revenue was up 14.2 per cent to £1.63billion or 4.2 per cent excluding currency fluctuations and the acquisition of Irish department store chain Heatons. It warned of “a number of strategic challenges” that will continue to impact its performance over the medium term. It expects annual underlying pre-tax earnings to come in at the lower end of a previously guided range of £265-285million. Sports Direct is looking to spend about £300million a year over the next two to four years on freehold property assets – it has 454 stores in the UK – as part of moves to improve relations with suppliers and to meet its goal of becoming the “Selfridges” of sports retail. Strategic acquisitions are on hold but it is forking out £40.5million on a corporate plane, which along with its helicopter “generate substantial operational benefits and enable it to operate efficiently across its global footprint”. Jefferies analyst, James Grzinic, said: “The journey from sports discounter to a business able to tap more effectively into the fashion and newness-led part of the market implies major changes in the stores, in supplier relationships and in consumer perceptions of the brand. Execution risks will be considerable.”

Sports Direct shares fell 26p to 288¾p.