UK: Sports Direct's profit falls 91% in challenging year
Sporting goods retailer Sports Direct has posted a 91% slump in full-year pre-tax profit after being hit by the weak pound and investment write-offs.
Profit tumbled to GBP10.7m (US$17.6m) despite revenues rising 8.6% to GBP1.37bn.
The company said non-cash adjustments included impairment of freehold property and intangible assets of GBP30.5m and of strategic investments held by Kaupthing Singer and Friedlander of GBP53.1m.
Group gross margin decreased by 280 basis points to 40.8%, almost entirely due to the drop in the value of the pound.
Group underlying EBITDA fell 8.9% to GBP136.8m and underlying profit before tax fell 20.2% to GBP68.2m - in both cases due to the fall in margin.
During the year the company rolled out branded areas in 121 stores in China within a four month period from start to finish.
No dividend was paid for the year, as Sports Direct said reducing debt should be a priority.
At current exchange rates the company is expecting underlying EBITDA to be at least GBP140m for fiscal 2010.
Dave Forsey, chief executive of Sports Direct, said: "The second half of the year remained challenging, but we are pleased with these solid full year results that reflect the resilience and relevance of our flexible business model, focused on the core principles of retailing."
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