Sports Direct chain sees profits halved

The chain, which has three large stores in Shropshire, suffered a 58.7 per cent slide in pre-tax profits to £113.7 million in the year to April 30.

Its chief executive is Newcastle United owner Mike Ashley, who said the group had taken action to limit the impact of the pound's heavy falls against the US dollar, but warned over longer-term sterling woes. He said upgrades to shops and the strategy of partnering with other brands to mirror Selfridges' store model was proving beneficial.

"Sports Direct is on course to become the Selfridges of sport by migrating to a new generation of stores to showcase the very best products from our third party brand partners," he said.

"We have invested over £300 million in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations.

"The devaluation of Sterling against the US dollar has led to a significant impact on earnings and profits in 2017. We have put in place hedging arrangements to minimise the short-term impact of currency volatility, but like many UK retailers we remain exposed to medium/long term currency fluctuations."

The chain has stores at Meole Brace in Shrewsbury, Wrekin Retail Park and Telford Shopping Centre in Telford, and Cross Street in Oswestry.

Sports Direct, which sources many branded goods in US dollars from Asia, said it was "optimistic" for the year ahead, targeting profit growth of between five to 15 per cent despite ongoing pressure from the pound.

Like-for-like retail sales – the directly comparable sales in stores which have been open for more than a year – edged 0.3 per cent higher, with total revenues up 11.7 per cent because international sales benefited from weaker pound.

Sports Direct warned after last June's EU referendum that profits would be hit because the company failed to hedge against the fall in sterling in the immediate aftermath of the vote, meaning the weak pound impacted its product-buying power.

Mr Ashley, 52, has been embroiled in a court case this summer with an investment banker over a £15 million deal allegedly struck in a London pub, with Mr Ashley still awaiting the verdict.

Sports Direct also continues to recover from the damage to its reputation after allegations last year over working practices at its Shirebrook headquarters in Derbyshire, and said it had made progress in ensuring its staff are treated with "dignity and respect".

Chairman Keith Hellawell insisted Sports Direct is a company of which "Britain can rightly feel very proud".

Mr Ashley has snapped up a raft of stakes in struggling high street firms, most recently a 26 per cent holding in Game Digital, with others in Debenhams and French Connection.