Sports Direct Share Discussion Threads

[au24] 05/12/2016 16:32

The Times were still banging out SPD bad old news in todays issue.
We are far more informed I feel.

[nortic 007] 05/12/2016 16:17

After all the weekend let's bash Ashley press ( any you know my thoughts about that) what a good fight back after such a bad start today.

[nortic 007] 05/12/2016 11:34

I think a got home at 5am that day but that's another story altogether :(

[terminated] 05/12/2016 11:22

Should profits indeed come in on the low side at about £170m the market cap of £1.7b should support this easily. Going forward I believe there is now some kind of hedging been put in place but obviously it's too late to have a positive impact but it should stop things getting worse. So for me this is all about the next 12 months. I'll work on the assumption he can get profits back above a modest £200m and that should guarantee a 20-30% increase. I also believe MA to be a very savvy operator and I just don't believe he would have initiated a share buy back at £3 if there was a danger of forthcoming profits struggling to maintain it. I mean he knows the current financial situation and he just wouldnt spend millions buying shares back if he thought he could buy them back a cheaper in a few months time. Although his lack of hedging was a reckless error he is on the whole good at holding the purse strings together. All imo but I'm going to buy some more under £3.

[nortic 007] 05/12/2016 11:15

Just worked those numbers . JD on P/E 32.69 looks like there trading ahead of the game to me.

[nortic 007] 05/12/2016 11:11

I've looked at JD Sports and ADVFN reckons they're trading on a P/E of 6.5. I think you'll find they're on a P/E of 30 ish . They had a 1 for 5 split which hasn't been taken into account . SPD low P/E JD high P/E I think there could be more mileage in SPD.Thursday beckons.

[discodave4] 05/12/2016 08:57

ExtraderNo probs.Was in here for a while pre Brexit but stopped out at a small loss. No rush to get back in, cannot see much value here at the moment and having second thoughts about MA and the BoD. They will continue to struggle IMO although as has been pointed out on here by someone (can't remember who - sorry) they did well in the last downturn/recession, so who knows.Good luck.DD

[nortic 007] 05/12/2016 08:37

Interesting tussle between buyer and seller this morning. Seller trying to get them below £3 but buyer is fighting back. It's a good watch.

[extrader] 05/12/2016 08:33

Hi DD,

Wikipedia.
Guess I should listen to my own advice and 'consider the source'. ;-<<br /> Thanks (seriously) for the correction.

ATB

[nortic 007] 05/12/2016 07:49

The most important thing is how the market take SPD figures. There's been a lot of negative news out over the past month or so and the shares have been quite resilient . Newspaper reports are telling us to what we already know and some reports are inaccurate as Extrader has pointed out. When you've hit rock bottom the only way is up and any new board appointments will help .

[philo124] 05/12/2016 07:32

Extrader, the same thought had occurred to me.

[discodave4] 04/12/2016 22:23

ExtraderMA 51%, with share buyback c 53%.......where do you get 61% from?.DD

[extrader] 04/12/2016 22:02

Hi DiscoDave4,

Thanks for another source/viewpoint !

I doubt whether outsiders will ever really know the full picture.

As the 61% owner of SPD, it's not beyond the bounds of possibility that we're seeing only the public side of a larger hedge , where MA has a (personal) FX position in one direction and the company has an FX (deliberate or otherwise) position in the other....

Jes' sayin', like.

ATB

[nortic 007] 04/12/2016 18:46

Well said sir.

[extrader] 04/12/2016 18:39

Hi again, Nortic 007 and PHILO124,

At the risk of introducing a discordant element, I thought the comment by his son as to what people liked or found most objectionable about Trump (according to your point of view) is that he has a blue-collar = working class mentality and mind-set whilst being filthy rich.

Something along thise lines (ie not giving a toss for political correctness - and not having to because of his wealth) probably explains a lot of (snobbish/classist ?) media hostility to Ashley.....

In the absence of a better explanation, that'll do for me , for now !

ATB

[philo124] 04/12/2016 17:07

Thanke Extrader. Store was moderately busy with the bulging stock noticeably reduced.

[nortic 007] 04/12/2016 14:03

I didn't mind the Telegraph article but when I read The Mail and Express they both like to write shock horror headlines. I know Mr Ashley has made mistakes in the past but you do feel that the press have got it in for him. Give the man a chance. They weren't moaning when they were £9 a share.

[extrader] 04/12/2016 10:50

Hi whites 123,

Funny thing, journalism ! From the DT article you quoted, you could also restate as :

- co expected to report 10% increase in sales;
- underlying earnings reflect a margin of approx. 10%
- topsliced holding in JD Sports, remaining holding valued at £ 145M (more than 8 % of market cap).

As to the reasons for the CFO's departure, if you read the relevant RNS (which the journalist either didn't or didn't understand), a different picture emerges :

In the Trading Update provided on 7 September 2016, the Company stated that it expected FY17 Underlying EBITDA to be in the region of GBP300m. This guidance was based on a GBP/USD rate of approximately 1.30.

In light of recent downward currency movements, the Company entered into a hedging arrangement with respect to the GBP/USD rate. Extreme movements overnight resulted in a crystallisation of that rate at 1.19, resulting in a negative impact of approximately GBP15m on the Company's FY17 Underlying EBITDA expectation.

In addition, after taking into account the hedging referred to above, if the GBP/USD rate is 1.20 on average for the remainder of FY17, then the negative impact on the Company's FY17 Underlying EBITDA expectation would be in the order of a further GBP20m.

So (1) there WERE hedging arrangements in place; (2) there was a crystallised loss of £ 15M as a result of the unforeseen spike (3) there MIGHT be a loss of a further £20M IF FX stays at 1.20.

It's currently 1.2727....pretty close to the original forecast assumption of 1.30...

It's hard to know whether the journalist is stupid or just has an agenda.

ATB

[whites123] 04/12/2016 09:47

Sports Direct hopes new board recruits will calm City’s jitters


Sports Direct is hoping to soothe simmering tensions with the City by beefing up its board amid the chain’s worst results in four years.

The sportswear giant has been attempting to repair its battered reputation by improving corporate governance following a pledge by Mike Ashley to make the business more transparent.

The Sunday Telegraph understands that Sports Direct will reveal this week that it has hired two City figures to boost its depleted board. The appointees have a mixture of retail and financial backgrounds, according to City sources.

Dave Forsey, a long-term lieutenant of Mr Ashley who had been with Sports Direct for three decades, abruptly resigned in September, just two weeks after the company threw open the doors of its Shirebrook headquarters to investors and journalists. Mr Forsey had been criticised for not managing the warehouse conditions which had led to staff being paid below the minimum wage and is understood to have left after a breakdown in his relationship with Mr Ashley.

Shortly after Mr Forsey left, the chain’s acting chief financial officer, Matt Pearson, resigned, after the retailer was forced to make an embarrassing admission that its failure to hedge against currency swings had left it facing a £35m hit from the slump in the pound. Sports Direct has been without a permanent finance chief for three years after Bob Mellors stepped down because of ill-health.

After Sports Direct’s tense shareholder meeting in September, the company has been in close talks with the Investor Forum, which controls assets worth £14 trillion and around 15pc of Sports Direct shares.

The Investor Forum has been in negotiations with the retailer about setting up an independent committee to review working practices and corporate governance. However, the Sunday Telegraph has learnt that its efforts have been frustrated after two candidates who had been vetted as suitable chairman then declined an invitation to join the committee.

Sports Direct is expected to report on Thursday that underlying earnings, a key measure for the cut-price retailer as it highlights profit margins, have tumbled 35pc to between £140m and £150m for the six months to the end of October.

The company’s profits are expected to have been boosted from its £12.5m sale of shares in JD Sports. Mike Ashley’s retail empire continues to own a 4.6pc in its rival, which has overtaken it this year to be the country’s biggest sportswear chain.

Analysts are predicting that total sales have risen around 10pc to £1.57bn as a result of currency benefits from its European shops.

After an annus horribilis, Sports Direct took another blow last week when the City watchdog said that it was investigating is auditor, Grant Thornton, for signing off a lucrative agreement with a delivery company owned by Mr Ashley’s brother.