After a surprisingly healthy day of trading yesterday, Sports Direct's share price fell this morning after analysts cut the retailer's earnings per share (EPS).
Liberum analysts said today that they have cut 35 per cent from Sports Direct's projected EPS in 2017, increasing to a 37 per cent reduction in 2019.
Sports Direct's share price fell by 5.52 per cent on the news.
8 July 2016 @ 9:15amSports Direct Intl (SPD)
The analysts modelled the effects of foreign exchange rates on earnings for Sports Direct after the Brexit vote.
Yesterday, the company announced in its results for the year that it has not hedged for its US dollar purchases - which amounts to 50 per cent of the cost of its goods sold. Liberum said this would be the "main impact" of Brexit on the retailer's margin in the next few years.
Sports Direct said yesterday it is considering share buybacks, which Liberum analysts said "could be meaningful", despite the timing and size of the buybacks being "unclear".
Liberum also highlighted that Mike Ashley is not going to take Sports Direct private.
However, Liberum said their post-Brexit forecast for the company is "the highest Brexit impact on any company in our coverage".
Mike Ashley's company has had a tough few months. Yesterday, even Sports Direct's chief executive, Dave Forsey, said the company had "delivered a disappointing year".
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the group "continues to be distracted" by its problems with working conditions at its Shirebrook warehouse, which sparked a select committee inquiry.