Troubled firm Sports Direct has taken the stock market by surprise after issuing a profit warning. The company’s annual profits will be up to £40m lower than expected, something Sports Direct is blaming on tough trading on the high street and the warm weather in the run-up to Christmas.
The ‘unseasonably warm weather’ excuse has something of a familiar ring as Next used the same line after revealing disappointing pre-Christmas sales figures earlier in the week. The first weeks of January often see companies begin to sink due to weak Christmas sales.
The bad profit results may also be due to the torrent of bad press that Sports Direct has received over the last few months. Not so long ago The Guardian discovered that the firm pays thousands of temporary workers below the national minimum wage and operates demeaning search policies.
More than £400m was wiped off the value of Sports Direct as shares in the company fell by 12 percent after the news came to light.
The company is due to miss its target for underlying profits of £420m and now expects profits of £380m and £420m for the year to the end of April.