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Sports Direct shares slip as House of Fraser weighs on results

Shares in Mike Ashley’s Sports Direct have dived more than 10% after the retailer said it had delayed the publication of its annual results.

The company, whose shares trade on the FTSE 250, blamed problems integrating its purchase of House of Fraser (HoF) stores last summer and increased scrutiny of its accounts.

It added that this could affect its financial forecasts.

People walk by the entrance to the retail store House of Fraser in central London
Image: House of Fraser was bought by Mr Ashley in August last year

Sports Direct had been due to publish results for the year to 28 April on Thursday but said it now expected to release them between 26 July and 23 August.

Its statement said: “The reasons for the delay are the complexities of the integration into the company of the House of Fraser business, and the current uncertainty as to the future trading performance of this business, together with the increased regulatory scrutiny of auditors and audits including the FRC (Financial Reporting Council) review of Grant Thornton’s audit of the financial statements of Sports Direct for the period ended 29 April 2018.”

In December, Sports Direct had described trading as “unbelievably bad” with significant challenges for House of Fraser, which it had bought out of administration at the height of the high street crisis.

:: Sports Direct challenges Debenhams restructuring plan

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It has since lost a major stake in the collapse and rebirth of struggling Debenhams and it is currently in the process of taking full control of Game Digital.

Shares – down almost 40% this year – fell more than 12% in early deals on Monday.

Neil Wilson, chief market analyst at Markets.com, said of the announcement: “The big question was what impact House of Fraser and various other acquisitions of dubious value would have on Sports Direct results. A material impact, one can only assume. HoF must be losing money hand over fist.

“Looking to the earnings, top line growth is expected to rise but profits are seen weaker as the cost of acquisitions weighs.

“Since reporting a 27% decline in underlying profits in the first half we’ve not heard a peep from Sports Direct on performance.

“The delay in delivering the annual results does not sit well with investors, who must be nervous about what it means.

“It seems likely it’s been a tough ride in the core Sports Direct retail division, whilst acquisitions have added nothing but increased costs,” he added.

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