Sports Direct investors flee as Mike Ashley delays publication of his empire’s results and blames ‘uncertainty’ around House of Fraser
- Shares in Sports Direct slid by 15 per cent in early trading on Monday
- The Mike Ashley-led firm delayed publication of the company’s results
- It blamed ‘current uncertainty’ as to the future trading performance of HoF
Retail tycoon Mike Ashley spooked investors on Monday after bosses at his tracksuits and trainers empire Sports Direct were forced to delay publication of its full-year results.
The acquisitive group’s highly-anticipated results were due to be published on Thursday but now the City may need to wait until August 23rd to glimpse beneath the bonnet of the firm.
Fearing the worst, investors fled. Shares slid 15 per cent in early trading on Monday to £2.20 – near to a seven-year low and well below the firm’s 2007 flotation price of £3.00.
Sports Direct shares are in the red after the Mike Ashley (above) led retail group pushed back its full-year results
Sports Direct gave a few reasons for the delay.
It said that its auditors at Grant Thornton need more time to sign off the accounts due to increased regulation and also pointed to ‘uncertainty’ around the future trading performance of House of Fraser, which it bought in a pre-pack administration for £90million last summer.
‘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,’ the group said.
Retail watchers were shocked at the move, with independent retail analyst Nick Bubb branding House of Fraser a ‘disaster area’.
Neil Wilson from Markets.com agreed that the department store chain ‘must be losing money hand over fist’.
And analysts at Peel Hunt said: ‘House of Fraser is clearly in a degree of disarray, it would appear that the finance department is under-staffed to cope with the array of acquisitions, and we are also concerned about the direction of the core business.
‘We have no choice but to withdraw our recommendation and price target given the uncertainty’.
Analysts fear that House of Fraser must be ‘losing money hand over fist’ as Sports Direct struggles to turn it into the ‘Harrods of the High Street’
Ashley has been on a spending spree across the high street in recent years, buying up struggling retailers like House of Fraser, Evans Cycles, sofa.com and, most recently, Game Digital. It also holds stakes in French Connection, Findel and embattled Goals Soccer Centres.
It had a near-30 per cent holding in Debenhams, but this was rendered worthless earlier this year when that firm collapsed and was handed over to its lenders.
‘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,’ Wilson said.
Last December, Sports Direct bullishly claimed that House of Fraser could be profitable again by its following financial year, despite it chalking up a £30million half-year loss.
When he bought the chain, Ashley vowed to keep as many of its stores open as possible and transform it into the ‘Harrods of the High Street’.
Today it hinted that its full-year forecasts may have been overly optimistic.
The delay comes after struggling Superdry pushed back its own full-year results. When they were eventually published, the firm revealed an £85million loss.
In a separate statement today, Sports Direct pointed out that its £52million takeover of Game Digital has moved a step closer to completion. Remaining shareholders have just 20 working days left to sell up.