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Sports Direct cuts staff bonus after profits fall 15%

Around 2,000 Sports Direct employees will not get their staff bonus this year after annual profits tumbled 15 per cent

Hazel Sheffield
Thursday 07 July 2016 08:37 BST
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Workers at the giant clothing store Sports Direct could earn £507 more each if the proposal is introduced
Workers at the giant clothing store Sports Direct could earn £507 more each if the proposal is introduced

Around 2,000 Sports Direct employees will not get their staff bonus this year after annual profits tumbled 15 per cent, worse than expectations, as the retailer continued to battle reputational damage relating to allegations of poor working conditions for staff.

The retailer posted a pre-tax profit for the year to April 24 of £361.8m, down 15 per cent.

Earnings before interest, tax, depreciation and amortiation came in at £381.4m, just within the £380m analysts expected, while revenue was up 2.5 per cent at £2.9bn.

The Sports Direct bonus scheme was set to kick in if profit hit a target of £420m for the year to April 2016. The target had been lowered for the year from £480m as part of a four-year scheme set out in 2015.

Sports Direct that the decision to increase wages above the national minimum wage for directly employed staff at the beginning of 2016 had cost the company around £10m.

Like-for-like sales were down 0.8 per cent, Sports Direct said.

Dave Forsey, chief executive, said Brexit had plunged all UK retailers into an uncertain future.

"Since the EU vote we expect the current political uncertainty, and potential weakness in the UK's short to medium term economic outlook, is likely to act as a continuing drag on consumer confidence," he said.

Sports Direct issued a second profit warning in March 2016 after Mike Ashley, the founder of the brand and its deputy chairman, told reporters that trading had been poor.

Sports Direct pay

Ashley admitted that some staff had been paid below the minimum wage when he appeared before MPs in June.

He said that workers were paid less than the statutory minimum because of bottlenecks at security in an admission that could result in sanctions from HMRC.

Ashley told Iain Wright MP, who chairs the Business, Innovation and Skills Select Committee, that workers were paid below the minimum wage for a “specific time”.

He said that security processes had since been improved to that “literally hundreds of people” can walk through the security line each minute.

But he said he could not address every issue, adding: “I'm not Father Christmas. I'm not saying I'll make the world wonderful.”

Staff have said that they are subject to security checks lasting up to 15 minutes during which time they are not paid.

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