Sports Direct Troubles Mount as Retailer Warns of Profit Slip

LONDON, United Kingdom — Sports Direct International Plc said it's no longer confident of meeting its full-year earnings target, heaping more misery on the embattled U.K. retailer.

Earnings before interest, tax, depreciation and amortization may be as much as 40 million pounds ($58 million) lower than a previous forecast of 420 million pounds, the company said in an unscheduled statement Friday. It cited deteriorating conditions for U.K. store operators and the unseasonably mild recent weather that has also hindered the likes of Next Plc and Marks & Spencer Group Plc.

The warning caps a difficult few weeks for the U.K.’s largest sporting-goods retailer. After revealing in December that sales growth had stagnated in the first half of the year, the company has been battling to defend its reputation in the face of media allegations over its employment practices. Billionaire founder Mike Ashley committed last week to pay staff above the national minimum wage at an annual cost of about 10 million pounds.

The shares fell as much as 9.7 percent to 462.6 pence in London, the lowest since April 2013. The stock was down 5.2 percent at 12:02 p.m.

Sports Direct isn’t the only retailer to have had a tough Christmas. The mild weather at the end of last year contributed to a 5.3 percent drop in same-store sales for U.K. mid-market retailers, according to researcher BDO.

Still, not all retailers are struggling. JD Sports Fashion Plc, which sells exclusive ranges from Adidas AG and Nike Inc., said last month it expects to beat profit estimates as it rides the coattails of a shift by U.K. consumers toward more stylish shoes and apparel.

Sports Direct said it now expects to report full-year Ebitda in a range of 380 million pounds to 420 million pounds. Before the statement, the average analyst estimate was for Ebitda of 406.5 million pounds, according to data compiled by Bloomberg.

By Sam Chambers; editors: Matthew Boyle, Paul Jarvis.