Sports Direct Issues Profits Warning

Sports Direct Issues Profits Warning

Retailer Sports Direct has warned on profits, blaming poor trading on unseasonal weather over the Christmas period.

It said it was no longer confident of meeting its forecast underlying annual earnings target of £420 million, and now expected to turn in earnings of between £380 million and £420 million.

The announcement by the group, controlled by Newcastle United owner Mike Ashley, comes less than a month after it posted its half-year trading results, adding it was "confident" of hitting its original earnings target.

Last month Sports Direct posted interim results, showing a 3.6% rise to £166.4 million in underlying pre-tax profits for the six months to October 25.

The news comes as high street bellwethers Next and Marks & Spencer posted dips in trading over Christmas citing warm winter weather.

M&S revealed like-for-like sales in its key general merchandise arm, which includes clothing, slumped by 5.8% in the 13 weeks to December 26. The weak figures were blamed on unusually mild weather and poor stock availability.

M&S also said its boss Marc Bolland will retire in April after six years at the helm, to be replaced by the firm's head of the chain's general merchandise business, Steve Rowe, who has worked there for more than 25 years.

Clothing retailer Next posted a shock 0.5% fall in sales across its 540 stores in the 60 days to December 24, while growth across its Next Directory online and catalogue arm slowed sharply to 2% after it blamed unusually warm weather for a ''disappointing'' festive sales performance.

Last month Sports Direct pledged to pay its employees above the national minimum wage, in a move that will cost the firm £10 million.

The group said it will pay all of its directly employed staff and casual workers above the minimum wage from January 1.

It comes after the firm faced allegations from the Guardian newspaper in December over low wages, that it forces compulsory unpaid searches taking around 15 minutes on staff as they leave, and that it also docked the wages of employers who clocked in just one minute late.

The probe prompted condemnation from the Unite union, which called the atmosphere at Sports Direct "gulag working conditions".

Senior Labour MP Chuka Umunna described the retailer, which runs around 400 stores across the UK, as a ''bad advert for British business''.

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