TEHRAN, Jul 16 -British retailer Sports Direct (SPD.L) has delayed publishing its annual results, warning problems integrating its purchase of House of Fraser stores and increased scrutiny of its accounts could affect the financial guidance it gave in December.
TEHRAN, Young Journalists Club (YJC) -Shares in the company, controlled by Newcastle United soccer club owner Mike Ashley, dropped as much as 16% to a seven year low of 220.2 pence on Monday.
Sports Direct described trading in December as “unbelievably bad”. While it did not give an update on its core sporting goods stores on Monday, it referred to complexities in integrating the House of Fraser (HoF) chain it bought last year and “uncertainty as to the future trading performance of this business”.
“HoF is clearly a disaster area, so this is a serious situation,” independent retail analyst Nick Bubb said.
Sports Direct’s core chain has been a relatively resilient performer in recent years, compared with a string of British retailers that have collapsed in the face of subdued consumer spending and a shift to shopping online.
However, the group has also engaged in a raft of dealmaking that has complicated the business. It recently spent time trying - and failing - to buy department stores group Debenhams, after purchasing House of Fraser out of administration last year.
On Monday, the company said it also now controlled video gaming retailer Game Digital, “thereby adding to the complexity of the business”, according to Bubb.
AJ Bell analysts questioned whether the acquisition spree was proving a distraction. “Since Mr Ashley gave guidance both including and excluding House of Fraser some eight months ago, this implies that trading in the core retail business has also disappointed,” they said.
Sports Direct said in December its core business was on track to meet its target of growing earnings by 5-15 percent in the year to April 29, 2019, but the House of Fraser acquisition would result in a drop in full-year earnings.
Source: reuters