Embattled sportswear groups Sports Direct (LON:SPD) took another blow as it revealed sterling’s slide overnight had lost it £15mln and could cost £35mln.
A fat finger trade has been blamed for the ‘flash crash’ that saw 6% wiped off the value of the pound in Asia in a minute overnight.
But the apparent mistake had profound consequences for Sports Direct, which had hedged its dollar currency exposure at US$1.19 to £1.
Once the pound crashed through that level because of the trade overnight it cost Sports Direct £15mln.
In addition, the company said if the currency rate stays at around US$1.20 until the end of its financial year next April it would cost it a further £20mln.
A series of profit warnings had already seen Sports Direct reduce its profit forecast to £300mln on an underlying basis (EBITDA), but that was based on an exchange rate of US$1.30.
Today’s profit warning marks another blot on what has been a traumatic year for both the company and its controversial owner.
The Newcastle United boss was forced to take over as chief executive after a string of high profile investigative reports in the UK media, regarding working practices and employment conditions within the organisation.
At its AGM, 53% of Sports Direct’s independent shareholders also rebelled and voted against the re-election of chairman Keith Hellawell.
The investors voiced concern about the company’s corporate governance and employment practices at its warehouse in Shirebrook, Derbyshire.