The House of Fraser integration complexities are posing challenges for Sports Direct, leading to a potential delay in the release of its preliminary annual results. Originally scheduled for Thursday, the results are now expected to be published between July 26 and August 23. The uncertainty surrounding the future trading performance of House of Fraser, combined with increased regulatory scrutiny on auditors, particularly in light of Grant Thornton’s audit of Sports Direct’s financial statements, has contributed to this delay.
Reports indicate that Sports Direct’s profits may have declined by up to 20% in the latest year, with pre-tax profits potentially dropping to around £122 million from £152 million the previous year. The acquisition of House of Fraser for approximately £90 million has presented challenges, with ongoing lease issues affecting the turnaround efforts for many stores. Despite initial plans to transform House of Fraser into “the Harrods of the high street,” progress has been slower than anticipated.
It is worth noting that Sports Direct previously held a significant stake in Debenhams, which was lost due to the latter’s administration filing. Legal actions are underway as a result of this loss. With regards to the delay in releasing results, Sports Direct has cited challenges in compiling additional information for the audit of the period ending April 28, 2019. Grant Thornton, the company’s auditor, has requested more time to complete the necessary audit work.
While Sports Direct maintains that its accounts and audit are progressing, there are still unresolved key areas that could impact the guidance from previous announcements. Given the current uncertain economic landscape for UK retail, the company underscores its commitment to conservative, consistent, and simple financial reporting principles. This cautious approach is deemed essential in light of the challenges confronting the retail sector.
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