PROFITS at scandal-hit retailer Sports Direct collapsed by more than half but its boss insisted the company is still on track to become the “Selfridges of Sport”.
Underlying pre-tax profit fell by 58.7 per cent from £252 million to £133.million in the year ending April 30.
Chief executive and sportswear billionaire Mike Ashley blamed the fall in profits on the drop in the value of the pound against the dollar.
Sports Direct warned after last year’s referendum that profits would be hit because the company failed to hedge against the fall in sterling in the immediate aftermath of the Brexit vote, which means the weak pound impacted its product-buying power.
Mr Ashley added that the company had now taken steps to “minimise the short-term impact of currency volatility”, but warned that it remained exposed to longer-term sterling weakness.
The company’s financial troubles have come amid a storm of controversy surrounding Sports Direct and Mr Ashley.
Sports Direct continues to recover from the damage to its reputation after allegations last year over working practices at its Shirebrook headquarters in Derbyshire, with Mr Ashley hauled before MPs for a grilling.
Mr Ashley famously admitted at the time that staff got less than the minimum wage and we fine for being late – as he was accused of running “gulag” labour camp.
Despite, the profit tumble Mr Ashley said that Sports Direct is still on course to become the “Selfridges of Sport”.
“Sports Direct is on course to become the ‘Selfridges’ of sport by migrating to a new generation of stores to showcase the very best products from our third party brand partners, ” he said.
“We have invested more than £300m in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations,” he added.
Sports Direct said it was forming a “new strategic partnership” with sportswear firm Asics.
Like-for-like retail sales edged 0.3 per cent higher over the year, while total revenues rose 11.7 per cent as its international sales benefited from the weaker pound.
The sportswear company also announced it had hired Jon Kempster as a permanent finance chief. Mr Kempster is set to join the company in September.