Sports Direct defends its treatment of casual labour

Sports Direct International , the retailer controlled by Newcastle United owner Mike Ashley, defended its treatment of workers on Thursday after a newspaper report said that security checks of staff left some earning less than legal levels.

The issue of lengthy security checks for agency workers at its warehouse in Shirebrook, central England, being undertaken in unpaid rather than paid time, was raised at the group's September shareholder meeting and was the subject of an investigation by the Guardian newspaper on Wednesday.

Sports Direct said the process had been streamlined to reduce waiting times. It said casual workers were an integral component of its workforce, and it complied "fully with all applicable legal requirements".

The report was the latest in a line of criticisms of the retailer's operations and overshadowed first-half results which saw flat revenues knock more than 12 percent off the share price.

The group had been criticised for the way it treats some staff and suppliers earlier this year, with lawmakers saying it behaved like a "backstreet outfit".

Chief Executive Dave Forsey said Sports Direct, which trades from 455 stores in Britain, would always resolve any issues with staff, whether employed directly or through agencies.

"We don't necessarily recognise the company that is being portrayed and we need to do a better job in making sure our story gets across," he said in an interview.

Investor Royal London Asset management, which holds the stock, said it was concerned about corporate governance at the company, which is majority controlled by Ashley.

"Until the company improves both its governance and its relationship with employees, shareholders face substantial risks," said the firm's corporate governance manager Ashley Hamilton Claxton.

Underlying earnings for the first six months of the year came to 218.5 million pounds ($332 million), up 7.6 percent and in line with market forecasts, but on weaker-than-expected flat sales of 1.4 billion pounds.

Sports Direct said revenues reflected a challenging market and disappointing weather. Profits were increased by selling more of its own higher-margin brands, such as Karrimor, Forsey said, and the group remained confident it would achieve its earnings target of 420 million pounds for the year.

Forsey said prospects for 2016 were also good, underpinned by the European Football Championships, in which England, Wales, Northern Ireland and the Republic of Ireland will compete.

Shares in Sports Direct were trading down 12.8 percent at 580.5 pence at 1112 GMT, the worst day for the stock since April 2014.

Broker Cantor cuts its price target on the stock to 700 pence, from 760 pence, calling the results " a little behind the curve", while Exane said the results were underwhelming compared with rival JD Sports.

$1 = 0.6591 pounds