Sports Direct's Mike Ashley loses £325m

Sports Direct suffered its worst day on the stockmarket for over four years on Thursday, knocking a massive hole in founder and deputy chairman Mike Ashley's personal fortune. Investors took fright after growth at the high street sports chain's core retail business evaporated. Like-for-like sales actually fell.

Revenue at the sports retail business grew just 0.2% to £1.2 billion in the six months ended 25 October, way below City expectations for about 2% growth. In the year to 26 April 2015 it had risen 5.5% to £2.4 billion. The implied like-for-like decline of 2.5% was also significantly worse than the 1% growth predicted by Citigroup.

Of course, that's had a knock-on effect at the bottom line. Underlying pre-tax profit grew just 3.6% to £166.4 million, where Citi had penciled in £172 million. A larger depreciation charge and higher share scheme costs will shave £10 million off full-year profit forecasts, and consensus estimates are expected to fall by 2-3%.

Meanwhile, underlying cash profit (earnings before interest, tax, depreciation and amortisation - EBITDA), on which the company's generous share scheme is based, grew by 7.6% to £218.5 million, and at least management is confident of hitting the full-year target of £420 million.

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However, Sports Direct shares still plunged as much as 15% Thursday to 567p. That wiped £325 million off the value of Mike Ashley's 55.1%, 330 million-share stake held through MASH Holdings and subsidiary MASH Beta.

Concerns centre around the firm's drive to promote sale of its own brands, which include Dunlop, Slazenger, Everlast, Lonsdale, Karrimor and Kangol.

And these results are in stark contrast to JD Sports, which sells big brands like Nike and Adidas and runs its own popular shoe chain Size?. Last week, it reported an "exceptional" first-half and said full-year profits would smash forecasts.

Sports Direct's chief executive, Dave Forsey, blamed the shortfall on strong sales last year ahead of the football World Cup finals, and poor summer weather. At least sales of football shirts should pick up next year when England, Wales, Northern Ireland and the Republic of Ireland play in Euro 2016 in France.

And Citi appears to think this is just a blip. It still rates the shares as a 'buy' with 900p price target, based on an enterprise value/operating profit multiple of 13 times for the year to April 2017. That's equivalent to a price/earnings (PE) ratio of 18.1 times. It currently trades on less than 12 times.

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