Sports Direct share price: Finance boss quits after profit warning

on Oct 13, 2016

Sports Direct (LON:SPD) has announced that it will part company with its chief financial officer at the end of the year. Matt Pearson is quitting to take a role with another firm, adding to the turmoil at the sporting goods retailer after a profit warning and CEO resignation.

Sports Direct’s share price has been relatively stable today, having climbed 0.07 percent to 279.90p as of 12:26 BST. The FTSE 250-listed company has plunged almost 60 percent over the past year, and is down by nearly 52 percent in the year-to-date.
Sports Direct said in a regulatory statement today that Pearson would remain in an acting capacity until December 31. The company did not name a permanent replacement for the outgoing CFO, but said it had appointed Herbert Monteith, who works on its finance team, as interim head of finance.

Pearson is the second senior management figure to leave the troubled retailer in three weeks after chief executive Dave Forsey stepped down amid slumping profits and allegations from lawmakers of improper labor practices. Since then, Sports Direct has been under the direction of its billionaire founder and owner Mike Ashley.
Sports Direct was one of the major losers in the immediate aftermath of the Brexit vote as the pound slumped in value against the dollar — the currency in which it buys many of its goods. A fresh dive in sterling prompted Sports Direct to issue a profit warning last week. It said earnings have already been dented by £15 million and it faced a further £20 million hit if the pound failed to recover.
The company declined to comment on whether the earnings outlook led to Pearson’s departure but confirmed in its statement today that trading had remained in line with that announcement.
Cantor Fitzgerald yesterday cut its price target on Sports Direct’s hold-rated stock to 260p from 320p, citing the group’s changed earnings expectations. The broker also expects an increase in debt levels, eliminating the chances of a dividend increase and buyback in the medium term. “In the meantime, the company will have difficulty in shrugging off its discount heritage; the currency led downgrade, in our view represents a step down in profitability while the stock is now not ‘standout’ value on the basis of our revised forecasts,” Cantor noted.

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