Sports Direct issues £15 million profit warning after “flash crash”

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The embattled sportswear retailer has warned investors as the sudden drop in the value of the pound wiped £15 million off its underlying profits.

Last month, amid increasing pressure from the media and its AGM, Sports Direct announced its expected underlying EBITDA for the next year to be around £300 million.

Due to last night’s baffling 6 per cent drop in the value of the pound, Sports Direct have released an unscheduled trading update, now estimating it at around £285 million.

It added that if the pound/dollar ratio stayed as low as 1.20 for the rest of the year, another £20 million could be lost.

RELATED: Mike Ashley strengthens grip on Sports Direct, taking over as CEO

Shares have taken an expected fall of 9.6 per cent this afternoon, and investors are raising concerns over the companies lack of permanent finance director, employing Matt Pearson as acting finance director.

“In light of recent downward currency movements, the company entered into a hedging arrangement with respect to the GBP/USD rate,” said the retailer.

RELATED: Sports Direct must work harder to “rebuild trust”

“Extreme movements overnight resulted in a crystallisation of that rate at 1.19, resulting in a negative impact of approximately £15 million on the company’s FY17 underlying EBITDA expectation.”

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