* Earnings short of forecasts, outlook downbeat
* Margins squeeze from fall in the value of pound
* Shares 8.5 pct lower, down more than half in 12 months
(Releads, adds share price fall, analyst reaction)
By Paul Sandle
LONDON, Dec 8 Sports Direct ended a
tough 2016 with a warning that trading was not going to get any
easier next year after a slump in first-half profit, sparking
another fall in its shares.
The sportswear chain founded by Newcastle United soccer club
owner Mike Ashley was badly caught out by the fall in the pound
which followed Britain's vote to leave the European Union in
June as it pays for its own-brand stock from Asia in dollars.
Sports Direct said on Thursday this had had a significant
impact and its underlying profit before tax fell 57 percent to
71.6 million pounds ($91 million) in the 26 weeks to Oct 23.
Group revenue increased by 4.2 percent on a currency neutral
The period coincided with a period of intense political and
public scrutiny of the retailer, which is still battling
criticism of its working practices and treatment of workers.
Ashley, who owns 56 percent of the company and took over as
chief executive after long-time stalwart Dave Forsey resigned in
September, acknowledged the last six months had "been tough for
our people and performance".
"What matters most to me is how tough the last year has been
for the people who work at Sports Direct," he said.
British lawmakers criticised the company in July for
"appalling" working conditions "closer to that of a Victorian
warehouse than that of a modern retailer".
An independent review commissioned by the company found
"serious shortcomings" in practices at its warehouse in
Shirebrook, central England, which it is taking steps to tackle.
Staff may have one new perk, however, the opportunity to
charter at market rates the group's new corporate jet, which it
is buying for $51.1 million.
Sports Direct said the plane, along with the helicopter it
already owns, will help it "operate efficiently across its
Shareholders have felt the impact on the group's reputation,
which combined with the damage from the Brexit vote has led to a
more than halving of its share price over the last 12 months.
The stock was trading down 8.5 percent at 291 pence at 0924 GMT.
The group said full-year 2017 underlying core earnings would
be around the bottom of its guidance in October of a range
between 265 million and 285 million pounds as it saw no let up
in the difficult conditions facing it in the medium term.
Analysts at RBC Capital Markets, who have an underperform
rating on the stock, said it would be difficult to pass on the
currency cost to customers without a significant impact on its
volumes as its shoppers tended be very price sensitive.
($1 = 0.7906 pounds)
(Editing by James Davey and Alexander Smith)