Sports Direct International (LON:SPD) underwhelmed the market with worse-than-expected interim results on Thursday, hitting its shares.
The retailer, owned by Newcastle United owner Mike Ashley, reported a 3.6% rise in underlying pre-tax profit to £166.4mln in the six months to October 25 from £160.6mln the year before.
Sports Direct, which owns the Slazenger, Dunlop, Everlast, Karrimor and Lonsdale brands, also said sales for the period were flat at £1.4bn, with retail sales growth slowing to 0.2%.
Cantor Fitzgerald said: "The interim results were a little behind the curve."
The stock dropped more than 40p, or 6%, to 625p this morning.
There were positives, however, as gross margins were better than expected and the firm said it should benefit from the Olympics and the European Championships in 2016.
Underlying earnings [EBITDA] were around 7% higher to £218mln and Sports Direct said it remains in-line with the recently revised target for full-year EBITDA of around £420mln.
The firm added that trading in the second half had begun as expected.
Dave Forsey, chief executive of Sports Direct said he was pleased with the “excellent set of results.”
The previous year, he added, was particularly boosted by sales generated from the FIFA 2014 World Cup, while the summer was “generally mixed” for the retail sector, making the results all the more impressive.
But Cantor Fitzgerald said concerns remain, particularly with recent acquisitions of Austria's Sports Eybl & Sports Experts, known as EAG, and Baltic retailer Sportland International Group (SIG), which the broker said have been a “disappointment”.
Despite this, Cantor said the firm should look to further develop its brand in Europe, while improving its online sales.
It also said the fact that Sports Direct has a £4.99 'click and collect' charge may indicate the company is not impressed with the performance of its online sales.