MIKE Ashley’s Sports Direct is expected to reveal a slump in profits next week after an eventful year for the retailer and the tycoon’s high-profile court battle this summer.
Annual results for the company released on Thursday are forecast to show a painful hit from the pound after it was left exposed to sterling’s plunge in the immediate aftermath of the Brexit vote.
Liberum analysts expect results to show underlying pre-tax profits more than halving to £126 million from £275m the previous year.
Sports Direct warned after last June’s EU referendum profit would be hit as it failed to hedge against the fall in sterling after the vote.
This was borne out in half-year results when pre-tax profits slumped 57 per cent to £71.6m.
The group has also warned of profits woes to come as its key hedging position expired at the end of April, with no hedge in place for this financial year.
Its financial troubles come amid a storm of controversy surrounding Sports Direct and Ashley.
The 52-year-old Newcastle United owner has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub.
The case provided a steady stream of headlines as lurid details were revealed of heavy drinking sessions and business meetings in pubs.
The judge in the case is expected to deliver a verdict imminently.
It comes as Sports Direct looks to recover from the damage to its reputation after allegations last year over working practices at its Shirebrook headquarters, with Ashley hauled before MPs for a grilling.
A shambolic 2016 also saw it host a tumultuous “open day” at its headquarters, and its chief executive Dave Forsey quit - to be replaced by Ashley - followed by a string of other senior departures.
But the group has fought back, with Ashley snapping up a raft of stakes in struggling high street firms, most recently a quarter of struggling Game Digital.
It is part of Ashley’s plans to be the “Selfridges of sports retail’’, with shareholdings in Debenhams, French Connection and Findel.
Sports Direct has also spent £100 million entering the US market.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the City will have “plenty to get our teeth into” with the release of the full-year results.
“We’ve had no update on how either the new strategy or the recent acquisitions have been faring since they were announced,” he said.
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