The half-year results statement Sports Direct - Half Year Results was poorly received by the market. I still think the problems inherent in this company are underestimated and the company is uninvestable for the private individual.

I could find little positive in the results other than the rise in group revenue on a currency neutral basis and excluding the Heatons acquisition of 4.2%. This is not the same as a like for like basis as SD still continues to open stores.

This business is all about one individual – the majority shareholder and now chief executive Mike Ashley. Mr Ashley has an impressive track record at this business but now the weaknesses outweigh the diminishing strengths.

I could not agree with any of the policies or directions now being promoted to restore growth and profitability.

Property

The doubts surrounding the future of “bricks and mortar” retail have been well aired. SD has been set on a path to invest “in excess of £300M per annum on property asset acquisitions over the next 2 – 4 yeas”. A commitment of possibly £1.2 billion just when most retailers are re-thinking. A fool or genius? – time will tell – my view is it’s a reckless commitment that no balanced board of directors would endorse.

Will the input of son-in-law Michael Murray make a difference? It’s all a bit squalid but the real mistake is the direction of travel.

Mr Ashley has a reputation for being a shrewd dealer in lease-hold sites for SD stores – taking on blighted or second rate sites and paying low rents accordingly. It comes as a shock to find an increase in the provision for onerous leases of £15.6M in the half-year. Not as shrewd as we thought?

Why commit to such a huge investment in freehold property? It would make raising the finance to take the company private a lot easier with tangible assets to offer as security. It will not happen this coming year, but after that I would not be surprised.

Overseas Expansion

Structured to fail.

The long list of countries (17) that SD operates in and the short list of stores (239) tells its own story. Three stores in Germany, seven in France; what is the point?

SD would be much better off focusing on say three countries and actively manage them. How can an efficient management and logistics structure manage…

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