Sunday 14 July 2019 1:03 pm

Sports Direct expected to post 20 per cent profit drop

Sports Direct is expected to report a 20 per cent drop in profit following an acquisition spree by billionaire owner Mike Ashley. 

Profit before tax could slip from £152.9m to £122.06m, according to data from S&P Global Market Intelligence.

Read more: Top Sports Direct executive leaves Mike Ashley’s firm

Analysts said revenue is expected to rise from £3.35bn to £3.65bn in the firm’s full-year results, which will be published on Thursday. 

Ashley, the chief executive of the sports retailer, has led an acquisition spree over the last year.

Sports Direct bought department store House of Fraser out of administration last August for £90m. The retail tycoon has said he wants to transform it into the “Harrods of the high street”.

More recently, the company snapped up Evans Cycles, Sofa.com and Game Digital.

Ashley failed to buy Debenhams earlier this year after the department store was taken over by a consortium of lenders, wiping out the businessman’s £150m stake. 

An attempt to purchase home shopping company Findel was thwarted after shareholders rejected the offer. 

Read more: Goals blocks Mike Ashley probe into £12m accounting crisis

“The rise in online shopping has eaten into the profit margin or traditional retail stores, and Mr Ashley is determined to snap up the struggling firms, and use his expertise and strong bargaining position to broker better deals for the underperforming companies,” said CMC Markets analyst David Madden. 

“Sports Direct itself had a respectable first half as profit jumped by over 62 per cent, when you strip out the House of Fraser data. On the other hand, Mr Ashley described November as “unbelievably bad. A statement which rocked investor confidence.” 

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