Sports Direct's Ashley sends shivers along UK high street
Sports Direct owner Mike Ashley said trading in November was "unbelievably bad", sending shares in the retailer down nearly 20 percent and adding to a wider sense of gloom hanging over British high streets during the peak Christmas season.
The comment from Ashley, who owns 61 percent of Sports Direct equity and is a well known business figure in Britain, chimes with other bad news from retailers.
Shares in women`s fashion group Bonmarche fell as much as 50 percent on Thursday after it said it could report losses this year and was faring much worse than during the financial crisis.
Clothing chains Primark and Superdry had already warned of weak sales as retailers gear up for Christmas.
Ashley made the comment during a presentation on first-half results, prompting shares to fall sharply on Thursday.
It came shortly after he described last month as "the worst November for retailers in living memory" in a letter to the head of Debenhams, a department store chain in which Sports Direct has a stake of just under 30 percent.
Sports Direct later issued a statement to the market to clarify that Ashley was not warning on profit.
"In response to a question concerning current trading in our sports retail business Chief Executive Mike Ashley stated that November`s trading was unbelievably bad," Sports Direct said.
"The company wishes to confirm, however, that we have taken November`s trading into account (in its guidance)."
Shares in Sports Direct were 15 percent lower by 1600 GMT while Debenhams was down by more than 4 percent.DEPARTMENT STORE BLUES
Ashley`s comments and the impact of rescuing British department store group House of Fraser overshadowed a resilient performance from his sportswear and fashion chains that are benefiting from efforts to move up-market.
Underlying core earnings for Sports Direct slipped 4.7 percent to 148.8 million pounds for the six months to Oct. 28, a period including the purchase of House of Fraser in August.
House of Fraser made a loss of 31.5 million pounds between Aug. 10 and the end of the period.
Underlying earnings excluding the department stores rose 15.5 percent, boosted by its Flannels, Cruise and van mildert fashion chain and increased earnings from its European sportswear shops.
Ashley, who also owns Premier League soccer club Newcastle United, said there were significant challenges ahead for House of Fraser, but there was a "fantastic opportunity" to revive the chain.
Excluding the acquisition, he said the group`s performance was impressive in the context of the sector.
Sport Direct is smartening up its stores and selling more premium products from its four key suppliers - Nike, Adidas, Puma and Under Armour - to better compete with rivals JD Sports and Decathlon.
The core business was on track to meet its target of growing earnings by 5-15 percent in the full year, it said, but House of Fraser acquisition would result in a drop in full-year earnings.
Prior to Thursday`s results, analysts` on average had expected 2018-19 core earnings to be 321.6 million pounds, according to Refinitiv data, versus 306.1 million pounds made in 2017-18.
($1 = 0.7921 pounds)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.