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'BAPTISM OF FIRE' AT SPORTS DIRECT

Share price is 'pathetic' said Mike Ashley

Thursday December 20,2007

By Peter Cunliffe, Deputy City Editor

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SPORTS DIRECT International profits slumped yesterday as founder Mike Ashley said its first 11 months on the stock market were “a baptism of fire”.

The owner of Sports World and Lillywhites suffered a 70 per cent fall in half-year profits to £21.2million but said it was on track to beat the City’s full-year forecasts, lowered after three profits warnings.

Relief at the lack of any new shocks sent the shares rising 16fp to 101p.

The company has been clouded in controversy since its £2.1billion listing at 300p per share in February landed deputy chairman Ashley a £929million windfall.

Investors were left fuming at the subsequent share plunge, the group’s poor communications with the City and failure to appoint a full-time chairman.

This month its own stockbroker, Merrill Lynch, advised clients to sell the stock and there has been speculation Ashley could buy the firm while the shares are low.

After a sparsely attended extraordinary shareholders’ meeting in London, Ashley insisted he had “no current intentions to take the company private”.

He said: “It didn’t seriously enter my head to walk away. The strategy was to go public for the good of the company in the long term but we have had a bumpy ride. We couldn’t have had a worse start. It was a baptism of fire.”

The egm gave permission for the firm to buy back a further 5 per cent of its shares, potentially raising Ashley’s stake to 72 per cent — a move critics slammed as “creeping control”.

He admitted underestimating the time a public company spent dealing with the financial community but said relations were improving.

“Sports Direct is not a broken business and the model is not broken,” Ashley said, insisting that the underlying price should be nearer 800p. The current share price was “pathetic”, Ashley added.

Half-year sales fell 7 per cent to £668million after what Ashley described as “three train wrecks” — the poor
summer weather, England’s ejection from the European Championships and tough Christmas trading.

There was no news on the appointment of a chairman, and acting chairman Simon Bentley said that recruiters were still searching.