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Plunging pound sees profits slump at Sports Direct

Mike Ashley Sky vidSports Direct, the leisurewear chain controlled by Mike Ashley, suffered a 59% fall in profits, largely because of the weaker pound.

Underlying pre-tax profit fell from £275.2 million to £113.7m and chief executive Mr Ashley, a former Rangers FC director, said it had taken steps to “minimise the short-term impact of currency volatility”.

Sports Direct’s reputation has been badly hit by revelations over its treatment of staff and chairman Keith Hellawell said the company had made “positive progress…to ensure that all of our people are treated with dignity and respect”.

Sports Direct, which has been without a chief financial officer since last October, said it had appointed Jon Kempster to the role.

The company’s key strategy is to turn itself into the “Selfridges of Sport”. It has formed a” strategic partnership” with sportswear firm Asics.

The Japanese company will manage dedicated areas within Sports Direct’s new upmarket “premium” stores.

Mr Ashley said: “Sports Direct is on course to become the “Selfridges” of sport by migrating to a new generation of stores to showcase the very best products from our third party brand partners. We have invested over £300m in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations. 

“We will continue to invest and make decisions for the long term, whilst trying to conservatively manage the currency volatility that is reflected in our full year results.

“As previously announced, the devaluation of Sterling against the US dollar has led to a significant impact on EBITDA and profits in FY17.

“We have put in place hedging arrangements to minimise the short-term impact of currency volatility, but like many UK retailers we remain exposed to medium / long term currency fluctuations. Our results were also impacted by provisions and depreciation charges.

“I would like to thank all our people at Sports Direct for ensuring that we continue to move forward together whilst elevating our retail proposition.”

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