Sports Direct boss Mike Ashley admits rebels 'have a point' as he sees off revolt

Wednesday, September 11th, 2019 8:47pm

Sports Direct's owner Mike Ashley has been re-elected to the board but admitted dissenting shareholders who voted against him "had a point", given the strife his retail empire is facing.

The company's investors overwhelmingly backed the chief executive, with 90.99% of votes in support of his continued directorship compared to 9% against, at its annual general meeting (AGM) in central London.

Approval of the firm's audited accounts for the year was also passed, with 99.8% of votes in favour.

Mr Ashley owns about 62% of the high street giant, and according to analysis by investment advisors PIRC, 31% of independent shareholders voted against him.

After the meeting Mr Ashley told Sky News: "Yes I agree that they have a point.

"The last three months can't have been very comfortable for them - you've got a £600m Belgian tax investigation, you've got accountants not seeking re-election - that's a little bit too much for most shareholders to take."

In July, the retailer said it was facing a €674m (£605m) tax demand from Belgian authorities while management was trying to deal with problems at House of Fraser which Mr Ashley said were "terminal".

At the time Mr Ashley warned of more store closures at the chain he acquired last summer in a £90m cash deal, expressing apparent regret for buying it, as Sports Direct published its much-delayed full-year financial results.

He said that the acquisition of House of Fraser had "led to significant uncertainty as to the future profitability of the group as a whole".

The billionaire tycoon, who also owns Premier League club Newcastle United, has a reputation for being a maverick with an unconventional style that continues to divide opinion.

Mr Ashley added after the AGM: "From when I floated everyone knew I did exactly what I said on the tin, so why would I change, I'm not necessarily wrong... we're still going, we're still in the fight, it might be the bottom of the 11, I might have picked myself off the canvas twice but I think I'm going to win on points."

In the last 15 months, Mr Ashley has presided over Sport Direct's own high street shopping spree, in which it has taken over a number of retail chains including House of Fraser, Evans Cycles, Game Digital, Sofa.com and, most recently, Jack Wills.

Sky News reported on Monday of Mr Ashley's intention to buy struggling jewellery chain Links of London, and is currently one of two final bidders for the company.

Ahead of the AGM, Sky News also learned that Sports Direct is currently appealing with the "big four" accountants to pitch for the retail group's audit contract, after warning that a smaller firm would be unable to perform the role.

The retail group has in the last fortnight asked the profession's dominant firms - Deloitte, EY, KPMG and PriceWaterhouseCoopers (PwC) - to hold fresh talks, with the hope that one of them will take on the contract.

Following the AGM, a Sports Direct spokesperson said: "We remain totally focused on delivering our elevated proposition which following the AGM continues to be supported by the investor community.

"We are already seeing some exciting milestones with the acquisition of Jack Wills, the opening of the new Flannels flagship store in London and plans for Frasers now in motion.

"We are building a young and dynamic executive team to assist in this transition but making sure we retain the core values in the existing business that have allowed the business to prosper over the years."

Sports Direct also announced a new share buy-back programme commencing 12 September.

:: Analysis: Mike Ashley thinks he can win in the battle of 'bricks versus clicks'

by Paul Kelso, business correspondent

Mike Ashley was never going to lose the shareholder-vote against him at Sports Direct's annual general meeting.

Unlike most chief executives, with 62% of the company he founded still in his pocket, Mr Ashley is not a prisoner of his investors.

In fact it can often appear to be the other way round, which explains why one-in-three independent shareholders voted against his reappointment to the board.

They may have failed to clip his wings but their message was clear, and speaking afterwards Mr Ashley told Sky News he understands their concerns.

The issues facing Sports Direct are not insignificant.

If the departure of auditor Grant Thornton after an unexpected £600m tax demand came to light was a blow, the failure to appoint a replacement from the so-called big four firms risks embarrassment.

Auditors are paid to scrutinise and sign-off accounts.

Not even wanting to open them in the first place is not a good look for a listed company.

Mr Ashley acknowledged this, but his solution was typically unorthodox.

Saying the accountants are worried about his "pantomime villain" reputation, he suggested the big four should do the job for a year each to see how they get on.

"I don't care if I pay £2m in fees."

It is hard to imagine another CEO saying something similar, but his directness and plain-speaking is what makes Mr Ashley among the most enigmatic and interesting businessmen in Britain.

He offers more insights in five minutes of small talk than a dozen of his counterparts provide in a month of over-managed interviews.

The next couple of years will tell us if he is still among the shrewdest.

Mr Ashley has bet Sports Direct's future on expanding on the high street while others are cutting their losses or suffering a slow demise.

While he has hoovered up battered brands like House of Fraser, Sports Direct stores are being taken towards the middle market - "elevation" in the jargon - and he has opened a chain called Flannels that sells high-end brands.

Mr Ashley is a self-confessed "dinosaur" in a digital age.

When I visited his office a few years ago he didn't have a computer on his desk, but he did have a hard copy of the previous takings for every shop in the country.

But in the battle of "bricks versus clicks" he thinks he can win out.

He bridles at suggestions he wants to "save the high street".

Instead, he says he is acting in the best interests of a company he built from a single store.

Mr Ashley thinks he sees something others cannot. Right or wrong, it will be his call.

Sky News

© Sky News 2019

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