Sports Direct profits plunge 58% as pound suffers Brexit hit

Mike Ashley's Sports Direct has revealed annual profits more than halved after it was left exposed by the pound's plunge following the Brexit vote.

The scandal-hit retailer reported a 58.7% tumble in underlying pre-tax profits to £113.7 million for the year to April 30.

Newcastle United owner Mr Ashley said the group had taken action to limit the impact of the pound's heavy falls against the US dollar, but warned "we remain exposed" to longer-term sterling woes.

The group, which sources many of its branded goods in US dollars from Asia, said it was "optimistic" for the year ahead, targeting underlying earnings growth of between 5% and 15% despite ongoing pressure from the pound.

It said the rollout of a new store format was bearing fruit, with better-than-expected early results.

Mr Ashley : "However, we will continue to be conservative in managing for the medium to long term, which may result in short-term fluctuations in underlying EBITDA (earnings), particularly given the continued uncertainty surrounding Brexit."

Like-for-like retail sales edged 0.3% higher over the year, while total revenues rose 11.7% as its international sales benefited from weaker pound.

Sports Direct warned after last June's EU referendum that profits would be hit because the company failed to hedge against the fall in sterling in the immediate aftermath of the vote, meaning the weak pound impacted its product-buying power.

Its financial troubles have come amid a storm of controversy surrounding Sports Direct and Mr Ashley.

The 52-year-old tycoon has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub, with Mr Ashley still awaiting the verdict.

It comes as Sports Direct also 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.

The group said on reporting results that it had "made positive progress across the business as we continue to strive to ensure that all of our people are treated with dignity and respect".

Chairman Keith Hellawell insisted Sports Direct is a company of which "Britain can rightly feel very proud".

Mr Ashley said the group has "smashed the ball out of the park with the Selfridges of sport concept", having been widening the reach of its stores by partnering with other brands.

As well as pumping more than £300 million into new stores, he has snapped up a raft of stakes in struggling high street firms, most recently a 26% holding in struggling Game Digital.

He has also bought stakes in Debenhams, French Connection and Findel.

Sports Direct, which in 2017 has notched up 10 years as a listed company, also announced it had appointed Jon Kempster as its new chief financial officer.

His appointment follows a string of senior departures at the group, with former chief executive Dave Forsey quitting last year - only to be replaced by Mr Ashley.