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Sports Direct Shares Plunge On Profit Warning

Sports Direct has become the latest big name retailer to fall victim to tough festive trading conditions as it issued a profit warning that sent shared tumbling by 15%.

The firm, controlled by Newcastle United owner Mike Ashley, said it had seen a "deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period" and expected the gloom to continue.

It (Other OTC: ITGL - news) said that as a result it was no longer confident of meeting its adjusted underlying earnings target of £420m for the full financial year.

The group said that in the light of those factors "and in anticipation of similar trading conditions between now and the end of April (LSE: 0N69.L - news) " it now expected annual earnings of between £380m and £420m.

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It is the latest retailer to blame the higher-than-average temperatures last month for poor sales – with Marks & Spencer (Other OTC: MAKSF - news) and Next (Other OTC: NXGPF - news) both citing the weather as a factor in their disappointing Christmas updates this week.

Winter fashion sales tend to be hurt by milder weather because it hits sales of products such as coats and other warm clothing.

Last month Sports Direct posted a 25% rise in pre-tax profits to £187.3m for the six months to 25 October but underlying results missed expectations and the figures were overshadowed by claims over working conditions for warehouse staff - helping shares plunge.

The retailer defended its behaviour after being accused of a series of practices including sharp reductions in pay for clocking in just one minute late and rigorous searches of workers at the end of shifts, as well as employees being harangued over a public address system for not working fast enough.

It came in for sharp criticism with Simon Walker, director general of the Institute of Directors, describing the company as leaving "a scar on British business".

The company later said it would launch a review of agency workers' terms and conditions led by Mr Ashley.