Sports Direct has seen revenues edge up in its first half, despite posting a near 70 per cent drop in reported pre-tax profits and more than doubling its debt.
Mike Ashley’s retail group has released its figures for the 26 weeks to October 29, reporting a 4.7 per cent rise in revenues to £1.7 billion, dropping to 1.2 per cent on a constant currency basis.
Underlying pre-tax profits rose 22.9 per cent to £88 million, but reported pre-tax profits tumbled 67.3 per cent to £45 million due to “fair value adjustments and transitional factors such as the disposal of assets”.
Meanwhile, net debts for the six months hit £471.7 million, up from £182.1 million in April.
The retailer cites “continued long term investment in strategic relationships” for the dramatic debt increase.
In the UK, sales also fell one per cent which Sports Direct attributed to reduced online promotional activity and store closures.
“Our high street elevation strategy is currently delivering spectacular trading performance within our flagship stores,” Ashley said.
“We intend to open between 10 and 20 new flagship stores next year. Whilst our reported profit before tax has been impacted by fair value adjustments and transitional factors such as the disposal of assets in FY17; our underlying profit before tax remains healthy.
“We will continue to invest for the long-term and our net debt has increased in line with management expectations. We continue to anticipate that growth in underlying EBITDA during FY18 will be within our forecast range of five per cent to 15 per cent.”
The news comes amid continued controversy for Ashley, this time over a proposed £11 million back payment to his brother and former IT manager John Ashley.
During the company’s annual general meeting yesterday shareholders voted overwhelmingly to block the payment, which Ashley states would have brought his brother’s payment in line with other senior executives.
A statement issued by the retailer read: “The board respects the views of the company’s independent shareholders, and considers all these matters to be closed. We now intend to move on.”