In a statement to the City, the company said that following the April relaunch of the Daily Sport, which aimed to position it as a more mainstream title in an effort to win new advertising, circulation had fallen by around 11% in May. The company's share price has fallen by more than 70% since the group was formed less than a year ago.
"The initial reaction to the relaunch has been disappointing, although the board remains confident that the revised style of the paper will attract new readers and advertisers," the company said. "However the board also recognises that this may take longer, and require more promotion than previously expected."
As a result, the company now expects that pre-tax profit for the year to 31 July will be lower than current market expectations, but in excess of £6m.
The group said it will purchase Flip Media, the publisher of Front magazine, for £125,000 in cash and the repayment of £140,000 of debt. Front is aimed at males aged 18 to 25, with a monthly circulation of around 40,000. The magazine is sold throughout the UK as well as overseas, and has a cover price of £3.50. Other titles owned by Flip include Hotdog and DVD World.
Sport said the acquisition strengthens the Manchester-based Sport Media Group's presence in the London market.