Sports Direct share price drops by 10 per cent as growth slows and questions mount over working conditions
Discount sports retailer Sports Direct has had one of its worse days on record, with its share price closing down over 10 per cent last night, wiping hundreds of millions of its market capitalisation.
The sell off was due to a double whammy of missing analyst expectations for growth and further questions over staff working conditions in the company’s Shirebrook warehouse, that was compared to a Russian gulag.
Sports Direct’s total sales edged up 0.1 per cent to £1.4bn in the six months to 25 October as underlying profits rose 3.6 per cent to £166m. Company watchers had been expecting profits of £180m.
The results come as an investigation by the Guardian accused it of paying temporary workers at its warehouse below the minimum wage.
Meanwhile, the poorly handled closure of some of the firm’s loss-making USC fashion stores resulted in sales in its “premium lifestyle fashion” plummeting by 12 per cent over the period.
In October, Dave Forsey, Sports Direct chief executive and right-hand man of billionaire majority shareholder Mike Ashley, was charged with a criminal offence connected to the collapse of USC after 83 staff were cast off with just 15 minutes’ notice in January 2015.
Forsey denies the charges. Investors are concerned the firm’s slowing growth could mean European expansion plans are less likely to move forward as quickly in coming years.