Mike Ashley’s business empire endures 63% profit crash

Mike Ashley profits
(Pic credit: Joe Giddens/PA Wire)
// Mike Ashley’s business saw pre-tax profits crash 63%, operating profits plunge 59%
// Sports Direct revenues up 11.7%, while like-for-likes was “static”
// Profit figures for Sports Direct not revealed, but gross margin slips to 41%
// Figures are pre-House of Fraser acquisition, for the year ending April 2017

Mike Ashley’s business empire saw profits crash in the year before he went on an acquisition spree, with Sports Direct in particular enduring a difficult year.

Accounts filed at Companies House this week show that while revenue at the retail tycoon’s Mash Holdings firm jumped 10 per cent to £3.33 billion in the year to April 30 2017, pre-tax profits crashed 63 per cent year-on-year to £102.5 million.

Mash Holdings attributed the crash to a lower EBITDA and higher depreciation charges, especially in its Sports Direct division.

The company’s operating profit plunged 59 per cent, from £195.7 million down to £79.5 million, but overall revenue increased 11.7 per cent year-on-year to £3.33 billion.

Meanwhile, overall revenues at Sports Direct – regarded as one of Mash Holdings’ key assets alongside Newcastle FC – rose 11.7 per cent to £3.24 billion for that year.

This was driven by a 6.3 per cent rise in UK and Ireland retail revenue, and a 38 per cent surge in international retail revenue.

However, like-for-likes across Sports Direct’s store estate was “static” compared to the previous year, and Mash Holdings flagged “continued uncertainty regarding Brexit”.

Exact profit and like-for-like figures for Sports Direct on its own was not revealed in Mash Holdings’ accounts.

Nonetheless, Sports Direct’s gross profit margin fell 320 basis points from 44.2 per cent to 41 per cent, after it was stung by the negative movement in the US dollar exchange rate with the pound and Ashley’s failure to hedge against the fall in sterling after the Brexit referendum.

According to the accounts, the firm is “currently not hedged for the full year 2018 period and beyond”.

Mash Holding’s overall performance was also dragged by a 30 per cent plummet in turnover and rise in operating expenses from Newcastle FC.

Ashley did not take a salary or dividend for that period, which saw him endure controversy surrounding allegations of employee mistreatment.

Mash Holdings’ accounts for year ending April 2018 have not yet been filed.

For the current financial year, Ashley went on an acquisition spree, buying both House of Fraser and Evans Cycle our of administration, and winning a bid to takeover Sofa.com.

He also made a bid to buy HMV out of administration, but failed, and just recently he shelved his ambitions to acquire Patisserie Valerie.

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