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72% Drop In Profits For UK Sports Retailer Sports Direct


07/19/2018


72% Drop In Profits For UK Sports Retailer Sports Direct
Following a £85m hit on an investment made in Debenhams, the struggling UK based department store chain, there has been a dip of nearly three quarters in the profit of the UK retailer Sports Direct. 
 
There was 72.5% drop in pre-tax profits of the sportswear retailer that was founded by billionaire Mike Ahsley to touch £77.5m in the year to 29 April, compared to £281.6m in the same period in the previous year. this drop was also reflective of the value reduction of its 29.7% stake in Debenhams.
 
The sale of its Dunlop business and JD Sports shares had propped up profits last year and this was another reason that fall in profits appears to be so dramatic, Sports Direct said.
 
Following the statement, there was a drop of 10% IN THE Shares in Sports Direct which was the biggest fall on the FTSE 250.
 
“Anybody who still believes in Mike Ashley’s punting powers will be disappointed to hear that the company has had to write a net £85m off the value of its ‘strategic stake’ in Debenhams”, said Independent retail analyst Nick Bubb.
 
There has also been a fall in the shares Debenhams at 11.9p on Thursday compared to 35.16p at the beginning of the year. Three profit warnings have been issued by the departmental store this year and the company faced more headwinds after it was revealed that cover for suppliers for the company had been reduced by credit insurers.
 
There has been a 2% drop in UK sales according to Sports Direct’s full-year results., UK accounts for about two-thirds of its total revenues. The UK revenues touched £2.2bn. there was also a slight (0.1%) drop in its European sales.
 
After conducting a review of the wages it pays to its staff in the UK, the company announced that all of its staff were being paid by it which included the casual employees, at hourly rates that were higher than the mandated national minimum wage. The total annual expenditure towards that end for the company – including commission and other rewards, was about £20m. during the year, shares worth £45.5m were received by eligible employees participating in the share bonus scheme of the company. Holiday pay and statutory sick pay is given to all of its staff in the UK, the company reaffirmed.
 
The company also faced flack from shareholders and corporate governance experts following the revelation in 2016 that a company owned by John Ashley – brother of Mike Ashley, was being paid by the company for delivering of the online orders of the company to places outside of the UK. The annual report of Sports Direct had not disclosed the contract that the company had with Barlin Delivery Limited. The contract has since been revoked,
 
Measures had been taken by the company board to make sure that John Ashley “did not benefit inappropriately from being the brother of majority shareholder Mike Ashley” by the company allowing voting rights to independent shareholders of the company to cast their vote on the £11m given to the company of John Ashley in December last year, the board said.
 
No dividend would be paid by the company, it said.
 
(Source:www.theguardian.com)


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