Sports Direct has warned the current political and economic uncertainty from the EU referendum results would continue to “drag on consumer confidence” as it reported a drop in profits in its full year results.
Core earnings for the retailer, run by headline-grabbing billionaire Mike Ashley, dipped 0.5 per cent to £381.4 million, while its underlying pre-tax profits plunged 8.4 per cent to £275.2 million.
On the other hand, sales increased 2.5 per cent to £2.9 billion.
Ashley said the fall in the value of the pound in the wake of the Brexit vote would have a significant impact on margins this year.
“Since the EU vote we expect the current political uncertainty, and potential weakness in the UK’s short to medium term economic outlook, is likely to act as a continuing drag on consumer confidence,” he said.
“When combined with the structural difficulties for UK retailers, including high street footfall, and our exposure to the weakness of the pound against the US dollar, these factors make the current outlook for full year 2017 somewhat uncertain and therefore hard to predict.
“We expect gross margin to be impacted significantly by negative movements in exchange rates in FY17 and beyond, given the recent movements in the US dollar compared with the pound.”
Sports Direct is not hedged against currency movements, meaning the weak pound will impact its product buying power.
The company has also indicated it has “no current intention of taking the company private”.