Sports Direct axes dividend as profits fall

SPORTS direct, the retail chain controlled by Mike Ashley, yesterday said it was scrapping its final dividend to slash debt after its profits collapsed.<br /><br />The sportswear retailer reported a 91 per cent nose-dive in pre-tax profits to &pound;10.7m from &pound;118.9m the year before. It was forced to write off &pound;53.1m of shares held in rival retailers following the collapse of its Icelandic banking partner, Kaupthing Singer &amp; Friedlander, last year.<br /><br />When KSF went into administration in October, the shares it bought on behalf of Ashley were frozen. Sports Direct said it was &ldquo;in dispute&rdquo; with KSF&rsquo;s administrators, Ernst &amp; Young, as to the true ownership of the shares.<br /><br />The charges relate to shares held in Blacks Leisure, JD Sports, JJB Sports and Finland&rsquo;s Amer Sports.<br /><br />Stripping out the writedowns, the group said underlying pre-tax profit was down by 20.2 per cent to &pound;68.2m.<br /><br />Chief executive Dave Forsey said that scrapping the dividend would save the group around &pound;14m and go some way to achieving its target of net debt below &pound;400m by the end of April 2010.<br /><br />Meanwhile, the group yesterday proposed a new bonus scheme that will give 25 per cent of base pay in shares to all staff if underlying earnings before profit, tax and depreciation hit &pound;155m next year, and 75 per cent if &pound;195m is hit.<br /><br />Sports Direct, which owns Sports World and Lillywhites stores as well as brands such as Slazenger, Lonsdale and Dunlop, has fared better than most during the retail downturn, benefiting from the problems of its main rival JJB Sports.<br /><br />Ashley and JJB Sports executive chairman Sir David Jones, were recently locked in a row over a &pound;1.5m loan Ashley made to Jones, which raised concerns Jones faced a conflict of interest. Jones has since repaid the loan.