Mike Ashley launches latest swipe at rivals as sales jump at Sports Direct
Sports Direct has insisted it is starting to see green shoots of recovery at department store House of Fraser, which it purchased from administrators for £90 million last year.
The company, controlled by retail tycoon Mike Ashley, also said a €674 million (£561 million) tax inquiry into unpaid VAT in Belgium is also progressing well and bosses expect a decision on 491 million to be made by early next year.
The revelations come as the business, which has snapped up several under-performing high street names in recent years, saw sales jump 14% in the six months to 27 October to £2 billion with pre-tax profits up 160% to £193.4 million.
Ashley used the results as an opportunity to attack his rivals, regulators and politicians over some of the scandals that have unravelled at businesses where Sports Direct had been a shareholder, including Debenhams and Goals Soccer Centre.
He also made a parting shot at outgoing Labour leader Jeremy Corbyn who focused heavily on attacking Ashley and other rich businessmen throughout the election campaign.
Ashley said: “Mr Corbyn attacked our business during the election campaign, but he really should have checked his facts as he really was shown to be ‘clueless’.
“He clearly has zero awareness of the fact we are one of the very few groups, and also one of the first, to have a workers' representative as a statutory director of the group.”
The chief executive also added that a planned meeting with shareholders from advisory group Pirc was scrapped due to Jeremy Corbyn making “it completely untenable for anyone associated in any way with the Labour Party – or any of its key supporters and supporting organisations – to be allowed access to such key and confidential meetings and the information divulged within them.”
Finally, he also demanded that restructuring advisers should be regulated, adding the sector had “become the Wild West in terms of deceit, dishonesty and self interest”.
In terms of sales, it was a strong period for the company, as it focused on its “elevation” strategy of improving stores and winning over big-name brands to be able to sell its most popular products.
Sales in its UK retail business, which includes Sports Direct, Jack Wills, Game Digital, Evans Cycles and Sofa.com, rose 6.7% to £1.2 billion, although this growth mainly came from takeovers.
When stripped out, sales fell 8.6%, with bosses saying this was due to “the continuing elevation strategy”.
On House of Fraser, the company insisted “green shoots of recovery” are starting to emerge.
Ashley added that recent sales have held up well during Christmas, but warned: “We are doing as much as we can to realistically save as many jobs and stores as possible however, despite our best efforts, there are still a number of stores which are currently paying zero rent and that are unprofitable and thus not sustainable.”
Steve Miley, a senior market analyst at www.asktraders.com welcomed the House of Fraser update: "This is the first time that investors have had clarity over the direction of the House of Fraser as the company was unable to provide forecasts for the current year at its full year results in July.
"These figures show that the firm is heading into the right direction and in today’s challenging environment, that is good news. Investors have cheered the improved outlook with the stock soaring over 10% in early trade."
The last six months has been relatively stable for Sports Direct, compared with previous periods.
At the company’s full-year results earlier this year, publication was delayed after management clashed with auditors over the Belgian tax bill.
But Ashley insisted the matter is close to being resolved. He said tax authorities have written to him saying “they are satisfied that they have all the information they require from Sports Direct and that they are satisfied that VAT has been correctly accounted for in the information they have reviewed so far.”
An initial decision will be made by the authorities early next year, he added.
Bosses have also endured the fallout from a major accounting scandal at Goals Soccer Centres, which remains under police investigation.