Sports retailers slump after Euro flop

LONDON (Reuters) - Shares in sporting goods retailers slumped on Thursday, after the England football team's failure to qualify for the Euro 2008 Championship finals sparked fears of a plunge in sales of replica kits.

Sports Direct, which is majority-owned by billionaire retail entrepreneur Mike Ashley, blamed the latest in a string of profit warnings on England's defeat to Croatia on Wednesday, which ruled the team out of the Euro 2008 finals.

Its shares plunged as much as 19 percent to a new low of 91 pence, and heaped fresh criticism on Ashley, who made 929 million pounds when Sports Direct shares floated at 300 pence apiece in February.

Panmure Gordon analyst Philip Dorgan said the hit to replica kit sales could take 10 million pounds off analysts' consensus forecast of 196 million pounds for Sports Direct's underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to April 27, 2008.

After a procession of bad news, Dorgan said he was expected underlying earnings of just 117 million pounds.

"We believe that there is more wrong with Sports Direct than the sale of a few England shirts and this is why we are well below consensus and have a target price of 80 pence," he said.

Sports Direct is the country's biggest sporting goods retailer and runs the Sports World and Lillywhites chains.

But Kaupthing analysts said England's failure would hit all sporting goods retailers, which are already facing a downturn in consumer spending growth following several interest rate rises.

UMBRO, JJB SPORTS

"The absence of a home (UK-based) side in next year's tournament will be a major disappointment for the sports retailers, who were hoping for a boost to sales during what is likely to be a tough year in terms of consumption," they wrote in a research note.

Umbro, which makes the England football kit and last month agreed to a 285-million-pound takeover by U.S. sporting goods giant Nike, forecast a hit to sales both this year and next.

"The effect on 2008 revenues, though still unclear, will be more pronounced due to a substantial reduction in our expected sales volumes for the new Away jersey," it said in a statement.

Umbro shares fell 3.2 percent to 169 pence, but were cushioned by the 193.6 pence a share cash offer from Nike.

"The best thing going for Umbro is the Nike bid," Numis analysts said in a research note. "Should this bid be derailed for any reason, then we would expect to see the share price fall back closer to 100 pence."

Shares in JJB Sports fell as much as 9.1 percent to a 5 year low of 132.5 pence.