Sports Direct renews profits warning after boss Ashley admits group 'in trouble'
Published 23/03/2016 | 14:49
Under-fire retailer Sports Direct has confirmed annual profits are under further pressure after founder Mike Ashley admitted the group was "in trouble".
The firm said full-year earnings are now expected at or around the bottom end of expectations, having already trimmed forecasts when it warned over profits in January.
It comes after shares tumbled 6pc on Tuesday after Mr Ashley's comments in an interview with The Times sparked concerns over the group's full-year figures, as MPs increased pressure on him to face questions about the treatment of workers.
In what was described by one retail analyst as a "startling admission", Mr Ashley - deputy chairman of Sports Direct and the owner of Newcastle United - said the group was "in trouble, we are not trading very well".
He added: "We can't make the same profit we made last year."
Mr Ashley is also facing mounting calls from the Business Select Committee to be questioned in Parliament despite his continued refusal to appear.
He has made it clear he has no intention of agreeing to a request to be quizzed by the committee on June 7, accusing the MPs of abusing the parliamentary process, and has offered instead to give the committee a tour of his head office in Shirebrook, Derbyshire.
In his interview with The Times, he blamed MPs for creating negative publicity that has hit the group's performance and seen employees miss out on bonuses linked to the firm's financial targets.
He said: "We are supposed to be taking the profits up, they are not supposed to be coming down, and the more the media frenzy feeds on it, the more it affects us."
The group, which runs around 400 stores across the UK, warned over profits in January after poor trading amid unusually warm weather over the Christmas period.
It said at the time it was no longer confident of meeting its underlying annual earnings target of £420m, and instead expected to turn in earnings of between £380m and £420m.
Business Committee chairman Iain Wright said on Tuesday: "We expect Mr Ashley to attend on June 7 and to take this opportunity to respond on public record to the serious concerns regarding the treatment of workers at Sports Direct.
"Select committees rightly expect witnesses to attend evidence sessions. Business leaders and others regularly appear in front of select committees when invited and we see no reason why Mr Ashley should expect to be exempt from the normal parliamentary process.
"Among other issues, we are keen to question Mr Ashley on the progress of the review he is leading on working practices at Sports Direct."
The committee has previously warned he could be in contempt of Parliament if he refused to appear.
Sports Direct has been accused of exploiting staff through zero-hours contracts, under which employees do not know how many hours they will work from one week to the next.
But Mr Ashley has previously insisted no workers at the Shirebrook warehouse are employed on this type of contract, and that they are used in stores "as a flexible and progressive way of creating retail jobs".