Sports Direct infuriates City with 'skimpy' update

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The Independent Online

Sports Direct enjoyed a pick-up in trading in August after a poor start to the summer, but continued to court controversy yesterday with an "infuriatingly skimpy" trading update.

The sports retailer's relationship with the City has been fractious since it listed on the Stock Exchange in February this year. Yesterday its founder, Mike Ashley, admitted that he was finding it difficult adjusting to life at the helm of a public company. "I'm finding it very challenging, particularly the procedures," he said.

The company is due to meet analysts later this month in an attempt to improve the group's relationship with the City.

Shares in the company received a boost yesterday after it said trading had improved since July and insisted it was on track to meet market expectations, despite difficult market conditions. City analysts had been expecting a third profits warning of the year, given the impact of the summer weather on sales. The shares rose 1.25p to 137.25p.

It also emerged that Sports Direct, which runs Sports World and Lillywhites, has built a 3.87 per cent stake in Umbro, a key customer. It bought in on the day that shares in the England football shirt maker plummeted as it issued a profits warning last week.

Speaking to just a handful of shareholders at the company's inaugural annual general meeting in Shirebrook, Derbyshire, the chief executive, Dave Forsey, said total sales for the 13 weeks to 29 July came to £335m, with gross profit of £149m, adding: "As previously stated the weather conditions in the UK have had a material impact on the financial performance of the UK retail business and therefore the group."

Analysts were irritated by the lack of detail and an absence of comparatives with the previous year. Nick Bubb, from Pali International, called the update "infuriatingly skimpy", while Philip Dorgan at Panmure Gordon said it "has almost been deliberately designed to antagonise its audience".

Richard Ratner, at Seymour Pierce, said the trading update would come as a relief to investors, but added: "The problem with Sports Direct is the lack of information about overall like-for-like sales movements. While the business is fundamentally sound, these and the corporate governance issues are likely to keep institutional investors away from the stock and to leave it on a relatively modest rating."

Mr Ashley, who also owns Newcastle Football Club, recently upped his stake in the business to 60 per cent as he took advantage of the weak share price, which has more than halved from 300p in February to 136p.