Sports Direct suffers €19.5m loss in Irish business
Impact of Covid-19 significant across six months but no clarity on longer-term effect
Sports Direct retail outlet on Marlborough Street, Dublin city centre. The company’s lease costs remained static at €11.4m. File photograph: Getty
The Irish arm of Mike Ashley’s Sports Direct and BrandMax stores plunged further into the red last year, recording losses before tax of €19.5 million.
That compares with a loss of just €1.5 million the previous year. Sales fell by 9.6 per cent to €181.6 million in the 12 months to April 28th last year.
But directors at Heaton Unlimited Company blame onerous non-cash provisions on leases of €26 million for the loss. The directors said the provision was due to challenging trading conditions for the year, which are expected to continue into the future.
The SportsDirect group is led by Newcastle United owner Mike Ashley.
It employs 1,425 people in Ireland, a figure that fell by close to 100 over the course of the year. That drop contributed a 9 per cent decline in staff costs to €34.63 million.
On the impact of Covid 19, the directors say that they expect a significant impact on budgeted revenues and operating margins for two quarters due to the closure of operations.
“We have not determined that there will be a long-term financial impact of these events on our results . . . particularly in the light of ongoing support from our controlling party,” they add.
Looking forward, they said retail trading conditions “proved challenging during the year and the directors are of the view that these challenges will continue into the coming year”. They say they will need to assess trading conditions on an ongoing basis and “make whatever decisions are deemed necessary to safeguard the future of the company”.
The accounts include an exceptional profit of €9.4 million from the sale of a property as well as “other income” of €2.17 million.
They also include a sharp increase in non-cash depreciation costs, which jumped to €15.2 million from €11.1 million the previous year. The company’s lease costs remained static at €11.4 million.