Whilst Mike Ashley is lucky enough to have Rafa Benitez single-handedly sorting out the mess at St James Park due to years of neglect, over at Sports Direct the majority shareholder is under pressure from all sides.
Sports Direct have on Thursday released their latest financial figures for the past trading year and pre-tax profits have fallen by 8.4% to £275.2m, this despite a 2.5% rise in revenue to £2.9bn.
One knock-on effect from these results is that the latest share-based staff incentive scheme has failed, due to not hitting the first underlying earnings target set in 2015, this was based on the achievement of four consecutive full-year targets.
The fallout of the Brexit vote has also created big problems moving forward for Mike Ashley and Sports Direct. The most significant of these likely to be the failure to ‘hedge’ against future movements in the pound, so this recent collapse in the pound, particularly against the US Dollar, meaning it will hit SD hard.
However, Sports Direct have insisted that Mike Ashley is not aiming to take the company back into private hands.
Dave Forsey CEO of Sports Direct –
“The group has delivered a disappointing full-year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses.”
SD fail to hit staff share scheme target:
“This is very disappointing as the scheme is a significant part of our high performance and reward culture, and we are working to replace this arrangement with a new incentive scheme to continue to reward our people for their commitment and performance.”
Impact of Brexit:
“Since the EU vote we expect the current political uncertainty, and potential weakness in the UK’s short to medium term economic outlook, is likely to act as a continuing drag on consumer confidence.
“When combined with the structural difficulties for UK retailers, including high street footfall, and our exposure to the weakness of the pound against the US dollar (as announced on 24 June 2016), these factors make the current outlook for full year 2017 somewhat uncertain and therefore hard to predict.
“We expect gross margin to be impacted significantly by negative movements in exchange rates in FY17 and beyond, given the recent movements in the US dollar compared with the pound.”