Sports Direct's share price falls after retailer clarifies Mike Ashley's "in trouble" comments saying earnings will come in at bottom end of expectations

 
Catherine Neilan
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Uh oh. We're in trouble. Someone's come along and burst MIke Ashley's bubble (Source: Getty)

Sports Direct has been forced to issue a clarification, confirming that the retailer's adjusted EBITDA will come within the expected range, after comments made by founder and majority shareholder Mike Ashley yesterday.

Ashley - who is notoriously private and rarely speaks to the press - yesterday gave an interview with The Times in which he said the company was "in trouble" and "not trading very well".

He was speaking in defence of the retailer's working practices, which have come under fire of late, and Ashley himself is currently fending off pressure to appear before MPs on the matter.

Shares in the sporting goods and fast fashion group - which earlier this year was kicked out of the FTSE 100 - plunged on his comments, ending the day down 10.6 per cent.

Sports Direct Sports Direct | mobile image

Today, Sports Direct put out a statement saying its current expectations were for adjusted underlying EBITDA, before share scheme costs, to come in "at or around the bottom of the range announced on 8 January".

On that day, the firm issued a profit warning, lowering its guidance on full year earnings by as much as £40m. Sports Direct's share price tumbled 15 per cent on that announcement.

But the update hasn't reassured investors: Sports Direct's share price continued to fall, and was down 2.1 per cent in early trading.

The full year runs until the end of April.

Peel Hunt analysts said Ashley was "missing the point" when it came to criticism of his company's working practices.

"There’s a long list of retailers and brands accused of all manner of wrong-doing and it has very rarely had an impact on consumer behaviour. The problems at Sports Direct lie much deeper than simply a bit of mud being thrown.

"The product range is ceasing to appeal to core shoppers and rolling out larger stores to try to impress Nike and Adidas will take a long time.

"Sports Direct is in the middle of a strategic crisis and making excuses (the weather, press coverage) just pangs of denial. We expect further disappointing updates ahead: the only short term solace will come from Euro 16."

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