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Sports Direct rocked by poor Christmas sales

FTSE 100 retailer, Sports Direct, has issued a warning regarding profits after poor trading over the Christmas period.

Shares in the company fell by more than 15 per cent after the warning was issued, dealing a blow to the fashion and sportswear retailer.

Originally, Mike Ashley, founder and deputy chairman of the company, had set a profit target of £420m before tax in the year ending April, but Ashley has now said that the company will fail to hit this target. Share prices in the company then plunged after mid-morning, and remained down by around 15 per cent for the rest of trading.

Ashley has blamed “deterioration of trading conditions on the high street and a continuation of unseasonal weather over the key Christmas period” on the downturn, but how much the latter can be held responsible is immeasurable.

This comes as a blow to investors who are operating in volatile trading conditions at the start of the new year, and means that share price at 4.30 pm stood at 433.6p; 15.32 per cent down on opening. The latest announcement also means that shares in the company have fallen by a significant 37 per cent over the last 12 months, and takes Sports Direct’s market capitalisation to below £2.7bn. If the decline in value were to continue at this rate, then the retailer would be dropped from the FTSE 100 in March.

Analyst, James Grzinic, said: “"This feels like a clearing of decks exercise," he said, adding that more light needed to be shed on key issues before considering a new valuation.”

On using the weather as an excuse, Mr Grzinic continued: "Admittedly, recent trading updates by fashion peers have confirmed the ongoing pressure in demand in recent weeks, both in the UK and in Europe. The lack of snow in the Alps certainly represents an added challenge for some European operations."

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