How should we take the latest set of numbers from beleaguered retailer Sports Direct (SPD)? Well, the share price fell 8 per cent on their release, so that gives us a clue. Analysts expected these figures to be rough: currency headwinds, corporate governance controversies and issues with suppliers have all played their part. But - in the words of broker Peel Hunt - the 'fly in the ointment' was the margin drop, which was 450 basis points at group level. That doesn't just highlight the group's insufficient hedging policies regarding weak sterling, but points to other issues to do with slow-moving stock and onerous lease obligations tied up with the European stores. Underlying cash profit fell by just over a third to £145m. As a result of these problems - and specifically the need to take a more "tailored approach" to the European business - the second half isn't expected to get much better.
Shareholders can thank the Financial Reporting Council (FRC) for greater visibility. Sports Direct is now providing specific commentary and segmental performance regarding its international division, following a discussion with the FRC, whose Financial Reporting Review Panel highlighted the lack of prior such commentary in findings released on the results day. The matter is now closed.