There were further woes for Sports Direct yesterday after analysts cut the group's profit forecasts by up to 50 per cent following a poor summer performance and continuing difficulties with its relationship with the City.
Philip Dorgan, an analyst at Panmure Gordon, sliced the current year's forecast by 44 per cent to £69m and the following year by 55 per cent to £61m. He also downgraded his share target from 120p to 80p. Shares in Sports Direct have plunged since it listed in February this year but were 3p ahead at 132.75p yesterday. The stock was given a boost this week after the group failed to issue a third profits warning and instead said trading had improved since July.
But analysts were not happy with the lack of like-for-like detail in the update. Mr Dorgan said it contained few pointers but he had used "reasonable assumptions" to arrive at the new figures. "Our new estimates are based on 23 years' experience of what happens next when the wheels come off at a retailer," he said. An external chairman was urgently required "to bring an outsider's perspective to a difficult situation", he added.
Sports Direct has been without a chairman since David Richardson quit in May, saying he had been "unable to establish a strong working relationship with the executive team". The company's founder, the billionaire entrepreneur Mike Ashley, told the group's annual general meeting on Monday he was he was finding it hard adjusting to life at the helm of a public company. "I'm finding it very challenging, particularly the procedures," he said.
Richard Ratner, of stockbroker Seymour Pierce, said: "The only factor that stops us selling the stock is that, in the past, Ashley has had an excellent record of buying stakes at the right price and at the right time."
Sports companies have all performed badly this summer because of the poor weather. Umbro, the football kit maker, issued a profits warning, blaming dismal sales of its replica strips.Reuse content