Sports Direct profits plunge post House of Fraser
Written by Peter Walker
Sports Direct has reported a 26.8 per cent year-on-year drop in underlying pre-tax profits to £64.4 million. However, if the August acquisition of House of Fraser was taken out of the equation, underlying earnings would be up 15.5 per cent to £180.3 million.
For the six month period ending 28 October, the retail group - which also operates USC, Flannels and Evans Cycles - saw total revenue rise 4.5 per cent year-on-year to £1.79 billion, driven by acquisitions and growth in sales, as a result of Sports Direct refreshing its store estate and selling more premium items from Nike, Adidas, Puma and Under Armour.
Founder and chief executive Mike Ashley said the performance was impressive when taking into account the wider woes of UK retail, noting that there were there were “significant challenges ahead” in turning House of Fraser around.
“I genuinely believe we have acquired a fantastic opportunity and with the efforts of Sports Direct and House of Fraser teams, and the support of the brands, local councils and landlords, we can turn House of Fraser into the ‘Harrods of the High Street’,” he commented.
A statement suggested Sports Direct was on track to meet a target of growing earnings between five and 15 per cent in the full year, although the House of Fraser acquisition could result in a drop in full-year earnings.
Earlier this month, Ashley suggested House of Fraser could be merged with Debenhams in a combative appearance before MPs, where he insisted “it’s not my fault the high street is dying”.
He told parliament’s housing, communities and local government select committee that traditional bricks and mortar retail will disappear by 2030 if no action is taken, floating the idea of a tax on retailers making more than 20 per cent of their sales online.