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Another delay to their preliminary results has again sent Sports Direct shares lower. However the c2% decline is not that large and highlights the total lack of visibility – there is not yet an indication that there is a material problem with the numbers.

The latest update is that there will be another update at midday.

“In short it’s a total and utter shambles and betrays a number of problems at the business after Ashley embarked on his rather random acquisition spree,” said Neil Wilson, Chief Market Analyst at Markets.com. “Above all it betrays a total disregard for shareholders. It not only raises questions about the haphazard way in which the investor relations and finance teams are run, but also could suggest a material problem with the numbers. Additionally it raises a question about whether Ashley will ultimately take the company private.”

Sports Direct shares fell sharply on July 15th after the company first announced delays to its annual results due to House of Fraser uncertainty and warned it may miss the core guidance offered in December.

The big question for investors was what impact House of Fraser and various other acquisitions of dubious value would have on Sports Direct results, as well as to what extent the softer retail market has affected the core business.

“The delay suggested a material impact,” says Wilson. “House of Fraser must be losing money hand over fist and the delay in delivering the annual results did not sit well with investors.”

Looking to the earnings, top line growth is expected to rise but profits are seen weaker as the cost of acquisitions weighs. Since reporting a 27% decline in underlying profits in the first half, the market has not heard a peep from Sports Direct on performance. “It seems likely it’s been a tough ride in the core Sports Direct retail division, whilst acquisitions have added nothing but increased costs,” Wilson added.

But this week, there was relief for Sports Direct shareholders as management said it would hit the December guidance. Today’s problems only create more uncertainty but it does rather suggest that either the core sports fashion business has missed the mark, and/or the costs from HoF are in excess of what was expected.

Having had a stellar start to 2019, Sports Direct shares were trading at 2.60p, down 1.09% at time of writing. Broker Peel Hunt maintained its hold recommendation on the shares on 15 July but said they were under review.

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Stuart Fieldhouse

Stuart Fieldhouse has spent over 20 years in journalism and financial communications, including six years as a wealth management correspondent for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong.

Stuart has worked as head of content at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Stuart continues to work with hedge funds, private banks, stock exchanges and other financial institutions on their communications, data and marketing requirements.

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