Sports Direct profit slumps 57 percent after ‘tough’ period

Sports Direct reported a 57 percent slump in first-half profit, capping a calamitous period in which it has come under fire for the treatment of workers and was left badly exposed by the fall in the value of the pound after the Brexit vote.

The British sports retailer said profits fell 57%, despite a 4.2% revenue gain – Sports Direct

The British sports retailer said on Thursday that underlying profit before tax fell to 71.6 million pounds ($90.57 million) in the 26 weeks to Oct 23. Group revenue increased by 4.2 percent on a currency neutral basis.

Founder Mike Ashley, who took over as chief executive after long-time stalwart Dave Forsey resigned in September, said the last six months had “been tough for our people and performance”.

“What matters most to me is how tough the last year has been for the people who work at Sports Direct,” he said on Thursday.

“Our people have once again found themselves in the spotlight through no fault of their own, yet they remain hardworking and loyal.”

Sports Direct, which is 56 percent owned by Ashley, was sharply criticised by lawmakers in July for what they said were “appalling” working conditions that were “closer to that of a Victorian warehouse than that of a modern retailer.”

An independent review by the company found “serious shortcomings” in practices at its warehouse in Shirebrook, central England, which it is taking steps to tackle.

Shareholders have also suffered from the damage to the group’s reputation, which have been compounded by a deterioration in its gross margin as a result of the devaluation of the pound following Britain’s June vote to leave the European Union.

The group’s shares have more than halved in the last 12 months to 315 pence.

The group said it expected the difficult conditions to continue over the medium term. It expects full-year 2017 underlying core earnings to be around the bottom of a range between 265 million pounds and 285 million pounds, subject to no unforeseen events and a continuation of current trading.

($1 = 0.7906 pounds)

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