It never rains but it pours for Sports Direct boss Mike Ashley: his sports retailer said today that full-year profits were a painful 91% down on last year. Ashley had enough problems even before this, what with his increasingly desperate attempts to offload his disastrous investment in Newcastle United, and his ongoing spat with rival JJB over a bizarre loan to its chairman. Now he’s also had to axe Sports Direct’s dividend, which is unlikely to help thaw his already frosty relationship with the City. Meanwhile, over at software group Autonomy, his fellow entrepreneur Mike Lynch continues to accumulate profits serenely…
Sports Direct said today that it made a profit of £10.7m in the year to April 26, 91% down on last year’s figure of £119m. One positive sign was that revenues were actually up 9%, to £1.37bn (over £1bn of which went through UK tills), but apparently the retailer hasn’t been able to maintain margins. However, it insisted this was due almost entirely to the fall in the pound, while some hefty losses on its (weird and wonderful) portfolio of strategic and property investments made things a whole lot worse. And the bad news for shareholders was that it’s now decided to cut its annual dividend, so it can use the £20m or so it will save to pay down some of its debt.
But it’s a very different story for another hugely successful UK entrepreneur, Autonomy’s Mike Lynch (hailed by MT as Britain’s finest, lest we forget). His software company has just enjoyed its best ever quarter: profits soared 81% to $121m, while revenues were up 40% to $324m. Autonomy’s become a real UK tech success story – corporates all over the world just can’t get enough of its intelligent search software, which they use to sift through their mountains of data. Like Sports Direct, Autonomy’s using the proceeds to pay down debt – but we imagine its shareholders will be rather happier about the prospect…
That said, Ashley would probably argue that Sports Direct isn’t actually doing that badly. The fact that sales are up suggests that it’s maintaining market share, while it’s also managed to open 27 new stores in the UK, plus another nine in Ireland and seven in continental Europe (with more to come). Its brands division (which handles licensing for the likes of Dunlop and Slazenger) saw revenues jump 20%. And given its cheap and cheerful product range, it’s likely to remain appealing to thrifty shoppers. In other words, the picture isn’t quite as grim as it might look at first glance. Pity the same can’t be said about Newcastle United.
In today's bulletin:
No more Mr Nice Non-Exec, says Walker
Last Gatwick bidder bites the dust
A tale of two entrepreneurs as Sports Direct profits plunge
Harry Potter and the Half-Paid School Fee
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