Sports Direct issues profits warning after Mike Ashley admits group is 'in trouble'

Mike Ashley says Sports Direct is "not trading very well" due to adverse publicity.
Mike Ashley says Sports Direct is "not trading very well" due to adverse publicity.
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Under-fire retailer Sports Direct has confirmed annual profits are under further pressure after founder Mike Ashley admitted the group was "in trouble".

The firm said full-year earnings are now expected at or around the bottom end of expectations, having already trimmed forecasts when it warned over profits in January.

It comes after shares tumbled 6% on Tuesday after Mr Ashley's comments in an interview with The Times sparked concerns over the group's full-year figures, as MPs increased pressure on him to face questions about the treatment of workers.

In what was described by one retail analyst as a "startling admission", Mr Ashley - deputy chairman of Sports Direct and the owner of Newcastle United - said the group was "in trouble, we are not trading very well".

He added: "We can't make the same profit we made last year."

Mr Ashley is also facing mounting calls from the Business Select Committee to be questioned in Parliament despite his continued refusal to appear.

He has made it clear he has no intention of agreeing to a request to be quizzed by the committee on June 7, accusing the MPs of abusing the parliamentary process, and has offered instead to give the committee a tour of his head office in Shirebrook, Derbyshire.

In his interview with The Times, he blamed MPs for creating negative publicity which has hit the group's performance and seen employees miss out on bonuses linked to the firm's financial targets.

He said: "We are supposed to be taking the profits up, they are not supposed to be coming down, and the more the media frenzy feeds on it, the more it affects us."

The group, which has around 400 stores across the UK, made a profits warning in January after poor trading amid unusually warm weather over the Christmas period.

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

Sports Direct has been accused of exploiting staff through zero-hours contracts, under which employees do not know how many hours they will work from one week to the next.

But Mr Ashley has previously insisted no workers at the Shirebrook warehouse are employed on this type of contract, and said they are used in stores "as a flexible and progressive way of creating retail jobs".