Sports Direct share price jumps as it calls its financial year "disappointing" as pre-tax profit plummets

 
James Nickerson
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Sports Direct delivered, in its own words, a disappointing year, pushing its sales up by just 0.6 per cent

Its share price jumped over 11 per cent in early morning trade on the results, which were actually better than many expected.

The figures

Sports Direct posted group revenue of £2.9bn for the year ended 24 April, a rise of 2.5 per cent on the year before, driven largely by Sports Retail.

But Sport Retail only grew by 0.6 per cent if you exclude Heatons, an Irish business acquired by Sports Direct.

However, underlying profit before tax fell 8.4 per cent to £275.2m for the 12 month period.

Earnings per share dropped to 25.5p, an 8.7 per cent fall.

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Why it's interesting

After staggering from one calamity to another this year, Sports Direct has topped off its financial year with what it terms, well, frankly, "disappointing" results.

"Disappointing they might have been, but many analysts had feared even worse and so the numbers were greeted with relief by the market," broker Hargreaves Lansdown said in a note.

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The problems started with allegations of malpractice in the workplace, followed by two separate profit warnings in the Spring.

In June, Ashley appeared in front of the Business, Innovation and Skills Select Committee. He admitted to having uncovered working practices that he labelled “unacceptable”, and just last week Sports Direct had to admit that it had not hedged its US dollar position leaving it exposed to the weak post-Brexit pound.

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The revenue fall means that the group hasn't met the first earnings before interest, tax, depreciation and amortisation target set under the 2015 share scheme. That's not great for the people working there.

"This is very disappointing as the share scheme is a significant part of our high performance and reward culture, and we are working to replace this arrangement with a new incentive scheme to continue to reward our people for their commitment and performance," the company said.

In fact, one of the only positives to speak of was this: "Our continued investment in upgrading and relocating stores, including key location doors such as Leeds and Plymouth, has been well received by our leading third party suppliers."

What Sports Direct said

Dave Forsey, chief executive, said:

The group has delivered a disappointing full year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses.

I would like to thank all of our people for being part of the Sports Direct team in what has been a particularly tough year for the group. Thank you for all your hard work this year and in the past, and I look forward to our future achievements.

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