Discount sports retailer Sports Direct was once a high-flier in the FTSE 100.
Now, shortly after being relegated to the lesser FTSE 250 index, the company has put out its second profit warning so far this year — the latest setback for the under fire retailer.
In the light of recent press coverage, Sports Direct wishes to clarify that its current expectations for adjusted underlying EBITDA [earnings before interest, tax, deductibles, and amortization] (before share scheme costs) for the full year to the end of April 2016 are at or around the bottom of the range announced on 8 January 2016.
The retailer forecast an EBITDA range of £380 million to £420 million in January, which in itself was a profit warning. Sports Direct last year made earnings of £383.2 million, which was a 15.7% jump on 2014.
The press coverage Sports Direct is looking to clarify are comments made by its own founder and biggest shareholder Mike Ashley to the Times.
In a rare interview, Ashley told the paper: “We are in trouble, we are not trading very well. We can’t make the same profit we made last year.” That sent shares in Sports Direct collapsing over 10% on Tuesday.
Sports Direct has been under a huge amount of pressure from the press and MPs over its employment practices. The company has faced heat for effectively paying workers less than minimum wage, although since the allegations were made in The Guardian newspaper, Sports Direct has committed to paying at least minimum wage to all staff, costing the company £10 million ($14.5 million).
Ashley, who also owns Newcastle United, is refusing to appear before a Parliamentary committee to answer questions on Sports Direct’s treatment of warehouse staff, but this only seems to be making things worse. Ashley could be charged with being in contempt of Parliament, something that reportedly, hasn’t happened in over 50 years.
Last month, Ashley was criticised by a series of major investors for treating Sports Direct like “his own personal plaything” and acting like the company’s chief executive, despite currently holding the position of vice chairman.
Sports Direct was recently relegated from the FTSE 100, after seeing shares bomb by more than 50% in just over six months.