Mike Ashley, touted as the man with the golden touch, doesn’t quite have all the luck it appears.
He isn’t what you would call a typical CEO: lack of charisma, no publicity, beer swilling and a tendency to park his tanks on other people’s lawns. He has been asked to stand before the Scottish Affairs Committee about his role on the collapse of USC and buy out resulting in 200 redundancies. He is also subject to a formal complaint from his zero-hours workforce who were excluded from Sports Direct’s bonus scheme.
He has kept his Strategic Development Director, Jeff Blue, more than busy buying up shares in House of Fraser and Debenhams, looking for concessional space at a shareholders preferential rate, and tasking him with the Finance Director role while an appointment is made. Jeff Blue has left the building though, leaving suddenly just 2 days before Sports Direct Q1 trading was announced.
On the face of it the business has delivered another strong quarter and the profit forecast for the year on track having tapped into a winning formula of brands (which Ashley bought at a discount) and a ‘pile it high’ proposition. But there are concerns on the horizon.
House of Fraser’s new Chinese owners are not inclined to offer preferential rates or indeed any rates to Sports Direct after the deal nearly knocked their bid off the rails. That may have been a punt that will be costly. The results of the pending inquiries could have financial implications, albeit a drop in the ocean, but the PR cost could be harder to swallow and the lack of senior leadership after Blue’s departure is a worry.
So what next for Sports Direct? Rather than an acquisition drive which is the default setting, a recruitment drive would be a good start. The business is complex, multiple businesses held by a controlling company, with operations and brands internationally. Senior appointments will need to be experienced and have a ‘ready for anything’ approach to business to keep up with Ashley’s ambitions and ego.
Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.