Health warning

26 April 2007 By John Foley Follow @johnsfoley

The newlyfloated retailer has put out what looks like a profit warning. But the astonishing lack of transparency makes it hard to tell. Throw in shonky corporate governance and mysterious share deals, and Sports Direct’s fitness for the public markets looks questionable.

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Sports Direct, the UK sportswear retailer and producer, issued its first trading statement since its February IPO. The shares fell 5% by Thursday lunchtime to 223p, 26% below the float price.

The statement, which contained no figures, said ebitda for the year would be broadly in line with latest market expectations. It also said retail sales in the UK had slowed. At the time of the float, Sports Direct reported that nineweek total sales had grown 22% on the previous year.

Sports Direct is 53% owned by its founder Mike Ashley, who retains an executive position as deputy chairman. Last month Ashley used some of the proceeds of the IPO to purchase a 4% stake in Adidas, the rival sportswear maker which is also a supplier to Sports Direct's retail outlets.

Merrill Lynch was global coordinator of Sports Direct's float. Citigroup and Credit Suisse acted as joint lead managers. Merrill and Citi also acted in the float of department store chain Debenhams last year. Debenhams shares closed at 148p on Wednesday, 24% below their float price.

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