Mike Ashley’s Sports Direct has blamed “currency headwinds” for a big drop in underlying pre-tax profits in its last financial year.
It reported trading earnings of £113.7m over the 12 months to 30 April – down 59% on the previous year – also hit by what it called “strategic challenges” in its operations on the continent.
The retailer had previously accused the media of an “extreme campaign” against it, turning shoppers away amid outrage over controversial working practices at its warehouse.
Chairman Keith Hellawell, who made that remark, insisted in the results statement that the resulting changes it had made meant Sports Direct was a company of which “Britain can rightly feel very proud”.
Total sales grew by almost 12% to £3.2bn while UK Sports Retail revenue increased by 6.3% to £2.1bn.
In his update to investors Mr Ashley, the company’s majority shareholder who took over as chief executive in the period, said he had acted to limit the impact of the pound’s heavy falls against the US dollar.
That followed an initial failure by the company to have a hedging strategy in place ahead of the Brexit vote.
However, he warned Sports Direct remained “exposed” to longer-term sterling weakness.
Sports Direct reported a currency loss of almost £24m for the year. The hit is mainly a consequence of using dollars to buy its branded goods.
It has been a torrid year for the company’s board while a £14m High Court damages action Mr Ashley is currently fighting has raised allegations of questionable business practices and revealed how the billionaire boss – in his own words – likes to get drunk.
Sports Direct, under pressure from investors in the FTSE 250 firm and politicians, agreed a series of changes to its operations as it became mired in allegations of Victorian working practices at its Shirebrook warehouse and poor corporate governance.
The saga culminated in Mr Ashley twice saving Mr Hellawell from the axe through his voting rights.
It even had to fight off claims by MPs visiting Shirebrook that Sports Direct had tried to bug the politicians’ conversations.
Mr Ashley said its investment, including £300m in its stores, meant Sports Direct was now on course to become the “Selfridges” of sport, with profits expected to be up to 15% higher in the current financial year.
“However, we will continue to be conservative in managing for the medium to long term, which may result in short-term fluctuations in underlying (earnings), particularly given the continued uncertainty surrounding Brexit,” he added.
Shares rose more than 4% in early trading as investors welcomed the more positive outlook.