Sports Direct’s efforts to move upmarket with new flagship stores contributed to a softening of its top line, a margin squeeze and a jump in debt, which hit the firm’s share value on Thursday.
The retailer, which has been criticised for its disclosure policy, corporate governance and past treatment of workers, is trying to revive sales and profit growth with smarter stores that sell more premium products from brands such as Nike and Adidas .
The group, founded and run by Mike Ashley, wants to become the "Selfridges of sport", emulating the status of the department store on Oxford Street in London.
However, the move upmarket resulted in retail revenue in its core British business falling 1 per cent to £1.14 billion (€1.3 billion) in the six months to October 29th as it reduced online promotional activity and closed stores.
Net debt jumped to £471.7 million from £182.1 million at April 30th, which it put down to investment in long-term strategic partnerships, the cost of the new stores and share buybacks.
Sports Direct shares fell 10 per cent on the news but rallied to close 2.2 per cent weaker.
– Reuters
