Sports Direct’s share price plunges as it delays results amid House of Fraser uncertainty
Shares in Mike Ashley’s Sports Direct dived this morning after the firm pushed back the publication of its financial results.
The retailer blamed the delay on troubles in its recently-acquired House of Fraser business along with increased regulatory scrutiny over auditor Grant Thornton’s inspection of its books.
Read more: Sports Direct expected to post 20 per cent profit drop
The high street retailer’s share price plunged 11 per cent to 235p as it also warned it might have to change its previous financial guidance due to “a number of key areas” in relation to its company accounts.
Sports Direct bought House of Fraser out of administration last year for roughly £90m.
In a statement this morning Sports Direct said: “The reasons for the delay are the complexities of the integration into the Company of the House of Fraser business, and the current uncertainty as to the future trading performance of this business, together with the increased regulatory scrutiny of auditors and audits including the FRC review of Grant Thornton’s audit of the financial statements of Sports Direct for the period ended 29 April 2018.”
The firm also said “there are a number of key areas to conclude on which could materially affect the guidance given in Sports Direct’s announcement of 13 December 2018”.
Sports Direct said it now expected the audited full-year results to be published between 26 July and 23 August.
“The big question was what impact House of Fraser and various other acquisitions of dubious value would have on Sports Direct results. A material impact, one can only assume. HoF must be losing money hand over fist,” said Neil Wilson, chief market analyst at Markets.com.
He added: “The delay in delivering the annual results does not sit well with investors, who must be nervous about what it means. It seems likely it’s been a tough ride in the core Sports Direct retail division, whilst acquisitions have added nothing but increased costs.”
Full-year pre-tax profits have been expected to slip from £152.9m to £122.06m, according to data from S&P Global Market Intelligence.
Analysts said revenue is expected to rise from £3.35bn to £3.65bn in the firm’s full-year results, which will be published on Thursday.
The move is likely to raise eyebrows among investors following a year which has seen owner Mike Ashley embark on a major high street spending spree, having snapped up the likes of House of Fraser and Evans Cycles.
Read more: Top Sports Direct executive leaves Mike Ashley’s firm
Shares in the company have tumbled 38 per cent to 263p in the last year.
In a report last week the FRC found that Grant Thornton came bottom in its annual review of the UK’s major accountancy firms.