Sports Direct fails to score with investors as shares take a hit following results chaos.
Sports Direct (SPD) fails to score as shares take a hit
- Shares were down this morning in excess of 10%, though the results themselves were not too bad.
- The ‘saviour of the high street’ cannot continue to buy UK retailers and expect to turn them around.
- We would join calls by others in saying that corporate governance at the group needs a radical overhaul and we suggest the shares are best avoided.
Unusual for a Monday during the holiday lull period, we have had a number of corporate stories shaping the markets this morning. The biggest movers are those whose stories developed over the weekend, or earlier, as is the case with Sports Direct. Following a bizarre set of delays to its financial results, the group finally released its full year report on Friday evening after the markets went home, with reason for the delay owing to a last minute tall bill of €674m from the Belgian authorities.
Only this morning have we realised the market implication: the shares were down in excess of 10%. The weekend press seems to have glossed over the results themselves which weren’t too bad at all. The group revenues increased by 10% to £3.7bn, while the full year underlying EBITA fell by 6% to £288m, better than market expectations. However events with the group still seem farcical, the so-called ‘saviour of the high street’ has badly misjudged its capabilities in turning around the House of Fraser department store and has cancelled its full year dividend with the CFO deciding to stand down.
We take the view that Sports Direct will remain in the headlines for the wrong reasons and it cannot continue to buy UK retailers at bargain basement prices and expect to turn them around when it faces an uphill battle against the changing dynamics of the UK high street. We would join calls by others in saying that corporate governance at the group needs a radical overhaul. While the share price reaches new lows, we still suggest the shares are best avoided.
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