Shares in Sports Direct wavered today after news of falling profits and sales caused by the slump in the value of the pound.
The high street store saw profits dive 67.3 percent from £140.2 million to £45.8 million in the six months to October 29.
The company’s debt has also increased from £182.1 million to £471.7 million after Sport Direct’s strategy of buying stakes in other retailers and their share buyback programme.
“Our high street elevation strategy is currently delivering spectacular trading performance within our flagship stores. We intend to open between 10 and 20 new flagship stores next year,” said Mike Ashley, chief executive and the majority shareholder of the company.
Shares in the company closed down just over 2 percent.
“Sports Direct’s corporate governance practices continue to attract headlines for all the wrong reasons, with independent shareholders rejecting an £11m payment to Mike Ashley’s brother on Wednesday,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“Unfortunately the lack of transparency also stretches to the ‘Selfridges of Sport’ initiative. Mike Ashley has described trading at the new format stores as ‘spectacular’, but it’s difficult to see evidence of that in the numbers. Improved profits are being driven by cost cuts rather than sales growth.”
Shares fell by 10 percent in early trading, hope was not lost by investors after it was revealed that Sports Direct had signed a contract with Nike.
Mike Ashley has attempted to rebrand the store. Last year he announced a change in strategy, with plans to turn Sports Direct into the “Selfridges of Sport”.
“It’s clear we have smashed the ball out of the park with our ‘Selfridges’ of sport concept,” boasted Sports Direct boss earlier this year.
Shares closed on Thursday 2.2 percent lower, at 374.90p.