'Flash crash' knocks £15m off Sports Direct's expected profit

Sports Direct has issued a statement saying its expected profits for next year will now be significantly lower due to the sharp drops in the pound.

The company said it had anticipated its profits for 2017 to be in the region of £300m, but that those calculations had been based on the assumption that the value of the pound would stay at a rate of approximately $1.30.

After a collapse in the currency market in Asian trading overnight on Thursday, however, Sports Direct has now had to revise its profit expectations, knocking £15m off its anticipated total.

The firm also warned that if the value of the pound does not recover, it expects to lose a further £20m in profits, based on the current pound value of around $1.20.

:: How will the pound's falling value affect you?

:: What caused the pound to fall 6% in two minutes?

The currency markets have seen significant volatility in the months following the UK's decision to leave the European Union, with sterling trading at 31-year lows for much of this week.

The most recent collapse, often referred to as a 'flash-crash', saw the pound-dollar rate plummet from an already low $1.26 to $1.18 in a matter of minutes - hitting $1.14 briefly at one stage, according to Thomson Reuters (Dusseldorf: TOC.DU - news) .

The drop equalled a 9% decline in the value of sterling and is thought to have been caused by a rough algorithm with controlled automatic trading during the relatively slow British overnight hours, or by an error in data entry.

Shares (Berlin: DI6.BE - news) in Sports Direct fell by 12.5% after the statement was issued.