// Sports Direct shares drop to new 8-year low after delayed results fiasco
// Sports Direct published its full-year results on Friday night after a 10-hour delay and after the stock market closed
// It now faces a £605m Belgian tax bill and more House of Fraser closures
Shares in Sports Direct plummeted to a new eight-year low as investors reacted to the delayed full-year results, which were released almost an hour after the stock market closed on Friday.
In early trading today, shares in Mike Ashley’s retail empire dropped by as much as 19 per cent before recovering mid-morning to be down nine per cent, and then recovering again by lunch time to be down by 7.75 per cent
Sports Direct’s delayed results for the year ending April 28 had revealed a Belgian tax bill of €674 million (£605 million), along with an announcement that House of Fraser stores are due to close after it booked a loss of almost £55 million.
In addition, chief financial officer Jon Kempster resigned – just weeks after head of retail Karen Byers quit, and company secretary Cameron Olsen also headed for the door.
Spots Direct said it would challenge the tax bill from Belgian authorities, adding it was “less than probable that material VAT and penalties will be due in Belgium as result of the tax audit”.
Meanwhile, Sports Direct admitted that House of Fraser – which it acquired out of administration for £90 million in August last year – was in terminal decline and that more stores may need to close.
Ashley hit out at the department store’s former owners – taking particular aim at ex-chairman Frank Slevin – for under investing in the business and for “excessive and unsustainable outsourcing and financing”.
As a result, Sports Direct would give no financial guidance for House of Fraser this year and admitted it would have thought again about purchasing the department store a year ago.
On its own, House of Fraser recorded an operating loss of £54.6 million on the back of revenues of £330.6 million.
Overall, Sports Direct’s delayed results showed a six per cent drop in group underlying EBITDA to £287.8 million but underlying pre-tax profit grew five per cent to £143.3 million, the delayed results showed.
Group sales for same period climbed 10.2 per cent to £3.7 billion, but excluding acquisitions such as House of Fraser ans Evans Cycles, this was down 1.9 per cent on a “currency neutral” basis.
For its key retail business – which trades under the Sports Direct chain – sales rose by just 0.3 per cent to £2.19 billion.
On a like-for-like basis, which excludes new stores, sales fell 1.6 per cent.
The full-year results were published at the end of a bizarre day for Sports Direct, which was branded a “total shambles” after it delayed publishing them for the second time in as many weeks.
The FTSE 250 company had been due to release its full-year results on Friday at 7am.
By 8am, when the stock market opened, the results were still missing, all planned calls with the media and analysts in the City were cancelled, and a presentation to investors at the retailer’s London head office was scrapped.
Analysts and investors were told to expect a further update at midday.
This was subsequently amended to a 2pm update, and then a 4pm update.
Finally, at 5.19pm – almost an hour after the stock market closed – the results were published and the City was told the presentation from the company would take place at 6pm.
Sports Direct’s full-year results were initially due for publication on July 18 but this was postponed to a later date.
It confirmed on Wednesday last week that the results would be published on Friday, and blamed the delay on the “complexities of the integration into the company of the House of Fraser business” as well as auditing issues.
The delays on Friday were reportedly a result of being informed about the tax audit in Belgium only the day before.