Sports Direct's share price slumps 15 per cent on profit warning

 
Catherine Neilan
Follow Catherine
Rangers v Raith Rovers - The William Hill Scottish Cup Fifth Round
Sports Direct has had a rough time of it in the last few weeks (Source: Getty)

Sports Direct has issued a profit warning, claiming warm weather deterred shoppers over the key Christmas period, prompting its share price to tumble.

The Mike Ashley-owned retailer, which has been fending off criticism around its various working practices, issued a statement this morning saying it had "seen a deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period" since its last update on 10 December.

"As a result, we are no longer confident of meeting our adjusted underlying EBITDA target (before share scheme costs) of £420m for the full year," the company said.

Instead it is now predicting earnings could be lower by as much as £40m, with a range of £380m-£420m.

Sports Direct's share price was down more than 15 per cent on the news.

8 January 2016 @ 12:30pmSports Direct Intl (SPD)

Not everyone accepts the company's explanation that the weather was a critical factor. In a note entitled "Don't blame it on the sunshine", Peel Hunt said while weather had been "unhelpful" there were other issues at play.

"We have long had an issue with the range... and some mud from press articles/documentaries may have stuck to the brand. Given that we heard from the company only four weeks ago, things must have deteriorated quickly and we do not expect a swift bounce back from this for SPD."

The business has come under fire in recent weeks for conditions under which many of its staff are said to work, forcing it to issue a statement on the matter shortly before Christmas.

Sports Direct, which rarely comments on news stories, then followed this up with a clarification over the role of new property boss Michael Murray, after it transpired he was the 26-year-old boyfriend of one of Ashley's daughters, with apparently no experience in the property industry.

Chief executive Dave Forsey was slapped with a criminal charge in October over the company's handling of the USC administration.

The many negative stories have led some to wonder whether the sporting retail giant could be losing the goodwill of consumers, as well as shareholders, who have long felt uneasy about the way the company is managed.