Mike Ashley stays silent on Sports Direct as London Stock Exchange ends trading
Sports Direct was meant to deliver a delayed set of results to the City today, but trading opened and closed and the only messages to come from Mike Ashley’s retailer were three further delays.
The sportswear firm failed to update the market at 7am, before telling journalists to await an update at 12pm.
Read more: Confusion reigns as Sports Direct delays annual results again
That turned into 2pm, when results again failed to materialise, and at 4pm – with just half an hour of trading left to go, Sports Direct again stayed silent.
The close of trading came at 4.30pm and Ashley’s company had still not posted its accounts.
Investors reacted negatively to being left in the dark, selling out of the company to send Sports Direct’s share price down 3.8 per cent to 230p, from yesterday’s 239p close.
Those who came to take part in the sportswear firm’s annual general meeting (AGM) today left London without any answers, with the meeting not going ahead.
Ashley’s company had originally been due to release its results on 15 July but delayed this until today.
Uncertainty surrounding House of Fraser and scrutiny of its auditor, Grant Thornton, was behind this decision, Sports Direct said at the time.
One analyst said the debacle made clear that Ashley does not respect his shareholders.
“It sends a message that shareholders are just a necessary evil for Ashley, that engagement with key stakeholders is unnecessary,” Neil Wilson, chief analyst for Markets.com, told City PM
Speculation around the source of today’s delay intensified as the day dragged on, and Debtwire questioned whether Ashley had failed to get its auditor to okay the business’s numbers.
“Sports Direct’s repeated reporting delays suggest that it is struggling to get its accounts signed off,” Nick Smith-Saville, head of research for Europe at Debtwire, said.
“Auditors are likely to be paying close attention to the value of assets following a multi-year acquisition and investment spree in the increasingly challenged retail space.”
Aside from buying House of Fraser for £90m last August, Ashley has bought Game for £52m and Evans Cycles for £8m.
“While the group does not disclose its banking covenants, an impairment-driven hit to equity may pressure any covenants that were based on this figure,” Smith-Saville added.
Wilson, meanwhile, said Sports Direct may be trying to fund a move to go private.
“He may well take private – increasingly not so far fetched as it would have been a year or two ago,” Wilson said. “The financials work to do it I think.”
That, he argued, may convince investors to hold onto their shares despite the rough ride Ashley has given them in recent years.
Sports Direct’s share price has plunged from 811p in 2015 to wallow around the 230p mark, a staggering 71 per cent drop.
Read more: What’s gone wrong at Sports Direct?
As for the cause of Sports Direct’s latest woes, Wilson said it could be a big miss on core earnings, an auditing error or House of Fraser having “totally blown up”.
For worried investors, there will be at least some more hours for fears to fester. The London Stock Exchange’s company update feed closes at 6.30pm.
Main image credit: Getty