Sports Direct shares plunge on currency own goal

James Sillars, Business Reporter

Shares in Sports Direct fell almost 7% at one stage on Tuesday after the retailer warned of further currency headwinds.

The FTSE 250 firm, controlled by Newcastle United owner Mike Ashley, had previously blamed sterling's weakness against the dollar after the Brexit vote for a £35m hit to earnings.

It later reported a 25% fall in half-year profits - with damage also coming from a challenging trading environment amid a row with MPs over working practices at its main warehouse.

In its latest announcement, Sports Direct warned it was facing financial damage from the devaluation of the euro against the US dollar.

Sports Direct, which buys its goods in dollars, said its existing hedging position - which essentially protects it from the euro's fall - was due to expire at the end of April.

Its statement said: "In response to certain inquiries received by the company in relation to currency, we continue to believe the devaluation of the euro against the dollar will impact on gross margin.

"Our euro/dollar exchange rate is currently hedged at 1.46, which is due to expire at the end of full year 2017 and we currently have no euro/dollar hedging in place for full year 2018."

The euro is currently worth $1.06.

Investors in Sports Direct have endured a rollercoaster - with shares losing more than a quarter of their value over the past 12 months as profit warnings and negative headlines took hold.

A corporate governance row, in the wake of the PR disaster over treatment of staff, has seen Mr Ashley twice ride to the rescue of chairman Keith Hellawell - using his voting rights to spare him the axe.

Mr Hellawell has said he will resign if investors fail to be impressed by its turnaround efforts come the next annual general meeting.

Sports Direct shares pared back some of their losses by the close on Tuesday but were still 5% lower at the close.