The Guardian (including associated Sports Direct chat)

[ian1964 10,440]

 

 

[ian1964 10,440]

[pete 2,499]

I hope tomorrow another 400.000 pounds nosedives out their pockets.

[forlanssister 3,050]

From The Independent:

 

Sports Direct: Double humilation for Mike Ashley as stocks fall 11% and judge throws out attempt to get Rangers chairman jailed

 

Mr Ashley was also conspicuous by his absence from Sports Direct’s presentation to the City, missing it for the first time since the company listed in 2007

 

 

Sports Direct’s founder, Mike Ashley, faced a double embarrassment as he watched the company’s stock fall by 11 per cent and a High Court judge threw out his attempt to get the chairman of Glasgow Rangers Football Club jailed on the same day.

 

The sportswear retailer’s shares sank by 73p to 592.5p – a 14-month low –wiping about £500m off its market value and leaving Mr Ashley, who holds a 55 per cent stake in the business, about £250m poorer on paper.

 

Investors turned against Sports Direct as the company admitted that it was losing ground to rival JD Sports, which upgraded its profits forecasts last week. By comparison, Sports Direct achieved only a 0.1 per cent rise in sales for the six months to 25 October, to £1.43bn. Profits also came in below expectations, up 3.6 per cent to £166.4m. Analysts had hoped for an 8 per cent rise.

 

Mr Ashley was conspicuous by his absence from Sports Direct’s presentation to the City, missing it for the first time since the company listed in 2007. One investor told The Independent: “The only reason for going to the results was to hear from Mike. What’s the point now if he isn’t even going to show up?”

 

For the first time, commentators also criticised the company’s habit of investing in rival companies and other listed businesses, rather than focusing on overseas acquisitions that it must make in order to hit its profit targets. This year has seen Mr Ashley’s firm buy holdings in Debenhams, Tesco, Findel, Direct Golf and others, with the market at a loss to explain some of the decisions made. Freddie George, a retail analyst at Cantor Fitzgerald, warned: “The cashflow, we believe, should be channelled into developing the brand online and overseas in Europe, rather than on opportunistic investments such as the recent purchase of a holding in [the online sports and gifts retailer] Findel.”

 

The Findel saga has left many in the City scratching their heads. Sports Direct bought a 19 per cent stake, now reduced to 17.5 per cent, in its rival and is pushing to have one of its executives appointed to Findel’s board. Last week, The Independent revealed that Sports Direct’s chosen candidate, Benjamin Gardener, was one of those responsible for the clothing retailer USC when it went into administration and did not act on advice to tell staff about possible job cuts.

 

The administration is now part of a criminal investigation, with Sports Direct’s chief executive, Dave Forsey, charged with failing to tell the Government about potential redundancies. He has pleaded not guilty and a trial date is expected to be set in March.

 

Jonathan Pritchard, a retail analyst at Peel Hunt, said that part of the problem was that Sports Direct had become too reliant on its own brands, such as Slazenger, Dunlop and Everlast, with third-party brands such as Nike and Adidas opting to give their best stock to JD Sports to sell.

 

 

http://www.independent.co.uk/news/business/news/sports-direct-double-humilation-for-mike-ashley-as-stocks-fall-11-and-judge-throws-out-attempt-to-a6768756.html

Edited December 10, 2015 by forlanssister
Link added

[forlanssister 3,050]

The Times:

 

 

 

Sports Direct pays price of profit miss as shares plummet

 

 

Deirdre Hipwell Retail Correspondent

 

Last updated at 2:03PM, December 10 2015

 

Shares have plunged in Sports Direct this morning after the sportswear retailer posted a lower than expected rise in profits and was forced to once again defend its working practices.

 

The retailer founded by Mike Ashley, the billionaire owner of Newcastle United Football Club, said its half-year underlying earnings had increased by 7.6 per cent to £218.5 million while its underlying pre-tax profit rose by 3.6 per cent to £166.4m.

 

The group’s cash generation remained solid during the period with the retailer recording just over £175 million of cash. However, the City was disappointed as it had been expecting a rise in profits of 9 per cent.

 

Shares in Sports Direct have fallen more than 14 per cent in early trading, removing more than £500 million in value as the market digested the news.

 

Freddie George, an analyst at Cantor Fitzgerald, said the results disappointed because the underlying £166.4 million pre-tax profit was a miss against a Bloomberg consensus of £180 million.

 

Sports Direct’s sales have also remained effectively flat, up 0.1 per cent to £1.4billion. Much of the disappointment was a result of a poor performance in the retailer’s premium lifestyle division.

 

Mr George said: “Retail sales declined by 0.7 per cent and were impacted by difficult comparatives, while premium sales were affected by USC [fashion] store closures.”

 

The results have also been overshadowed by a Guardian undercover investigation of Sports Direct’s working practices at its enormous distribution facility in Shirebrook, which has once again called into question how it treats its employees.

 

The report alleged that strict measures meant that staff effectively were receiving pay that was below the minimum wage.

 

Keith Hellawell, the chairman of Sports Direct, said rewarding its staff for good performance was central to its operations adding: “Our casual workers are also an integral component of our workforce. To be clear, no warehouse workers are on ‘zero hour’ contracts, all have contracted hours with the agencies.

 

“In retail, casual workers find the flexibility offered by these arrangements very useful. We comply fully with all applicable legal requirements and will continue to keep these under review.”

 

Mr Hellawell also said today that a number of issues that had been raised by shareholders at the annual meeting had been addressed, such as increasing the speed of security checks. The chairman added that operationally its three divisions had performed well.

 

During the period it has completed the latest phase of its Shirebrook campus and agreed a deal to buy the remaining 50 per cent of Heatons, its Irish associated company.

 

The group, which has stakes in Debenhams, House of Fraser and Findel, the owner of kitbag, the replica football strip maker, said it would continue to “invest in strategic stakes while maintaining a strong balance sheet”.

 

Dave Forsey, chief executive of Sports Direct International, said: “The group has delivered another excellent set of results particularly given the strong comparable sales generated in the build up to the FIFA 2014 World Cup and after a generally mixed summer for the retail sector.

 

“We continue to innovate, refine and improve our customer proposition. In line with this strategy, during the period we opened new larger format stores in Leeds and Plymouth and combined gym and retail spaces in St Helens and Newport.

 

“Trading since the period end has been in line with management’s expectations and, while we retain the ability to invest in margin, inventory and group marketing to deliver long-term sustainable growth, we remain confident of achieving the 2015 share scheme’s revised underlying EBITDA target of £420m.”

 

However, Ashley Hamilton Claxton, Corporate Governance Manager at Royal London Asset Management, a shareholder in Sports Direct, said : “While we acknowledge the strong financial results released by Sports Direct today, we remain concerned about corporate governance issues at the company and believe these issues will continue to place a drag on the share price over the long term.

 

“Until the company improves both its governance and its relationships with employees, shareholders face substantial risks. We maintain that companies, such as Sports Direct, need strong governance in place to protect the interests of minority shareholders, employees and other stakeholders. Ignoring such issues is short-sighted and runs the risk of eroding shareholder value.”

 

 

http://www.thetimes.co.uk/tto/business/industries/retailing/article4637555.ece

[Bearman 9]

Just a personal observation...but the SD shops aren't customer friendly, trying to walk through the store due to stocks and stocks with hardly any space is difficult...also that 'smell' of foosty clothes (you know that smell) fills the shop.

 

Reminds me of the old retailer 'What Everyone Wants' cheap goods and not worth a penny.

 

Cashley's kingdom will come crashing down at the loss of cheap jobs only.

[forlanssister 3,050]

When there are serious concerns over your corporate governance this isn't the kind of thing that placates your restless shareholders.

 

Mike Ashley’s family ties in investment fund

 

 

Deirdre Hipwell

 

Published at 12:01AM, December 7 2015

 

The 26-year-old boyfriend of Mike Ashley’s daughter has been put in charge of a £250 million investment fund and the roll-out of Sports Direct’s new fitness superstore brand.

 

In a move that will again raise eyebrows in the City, Michael Murray has been appointed to a property director role at Sports Direct, the sportswear retailer that Mr Ashley founded.

 

Mr Ashley has also appointed his potential future son-in-law to senior roles in other private companies he controls. These include MGM Grand Newcastle, which is linked to Mr Ashley’s Newcastle United Football Club, and Mash Services, which is the tycoon’s holding company.

 

Mr Murray’s links to Mr Ashley’s daughter, Anna, with whom he lives, were not disclosed to investors by Sports Direct. It is understood that the retailer did not believe that it had was obliged to disclose Mr Murray’s appointment as he was not appointed to the executive board.

 

Mr Murray’s new role is likely to raise questions about corporate governance standards at Sports Direct, which will report its half-year results on Wednesday, when it is expected to reveal a 9 per cent rise in profits.

 

 

http://www.thetimes.co.uk/tto/business/industries/retailing/article4634065.ece

[ian1964 10,440]

Sports Direct shares plunge as sales growth stalls

 

More than £400m wiped off retailer’s value as investor says corporate governance concerns could drive shares down further

More than £400m was wiped off the value of Sports Direct as City investors and MPs turned on the company following disappointing financial results and revelations over pay and working conditions unearthed by a Guardian investigation.

 

Shares in the UK’s biggest sportswear retailer slumped by 11% on Thursday, costing the company’s billionaire founder, Mike Ashley, some £237m.

 

The Guardian revealed on Wednesday how the retailer’s temporary warehouse workers are subjected to an extraordinary regime of searches and surveillance. Undercover reporters also came up with evidence that thousands of workers were receiving effective hourly rates of pay below the minimum wage.

Revealed: how Sports Direct effectively pays below minimum wage

Read more

 

The company was branded a “scar on British business” by the Institute of Directors, was rounded on by its own shareholders and opposition MPs demanded that the FTSE 100 company be investigated by HMRC.

 

The revelations, coupled with a worse-than-expected sales performance over recent months, prompted the worst day’s trading for Sports Direct shares for nearly two years.

 

On Thursday, the Guardian also lay bare some of the pricing policies employed by the retailer and the crisis of corporate governance at the firm, which has been widely criticised for conditions in its warehouse where workers are warned they will be sacked if they receive six black marks – or “strikes” – over a six-month period. Strike offences include a “period of reported sickness”; “errors”; “excessive/long toilet breaks”; “time-wasting”; “excessive chatting”; “horseplay”; and “using a mobile phone in the warehouse”.

 

A string of normally guarded City figures emerged to criticise the company’s business practices as a result of the Guardian’s revelations. Shadow ministers and local Labour MPs pledged to write to HM Revenue & Customs to demand an investigation into whether the company was adhering to national minimum wage legislation.

 

Simon Walker, director general of the Institute of Directors, said: “Unfortunately, the actions of Sports Direct will leave a scar on British business. IoD members share the public’s outrage. At a time when the reputation of corporate Britain is on shaky foundations, another scandal is hard to stomach for the overwhelming majority of businesses that have integrity at their core.

 

“I urge people to remember that Sports Direct is categorically not a representative of British business, and those who believe passionately that successful economies live and die by the strength of the private sector, must point the finger when companies step out of line.”

 

Sports Direct’s own investors joined the attack. One leading shareholder, who did not want to be named, said: “Sadly we have come to expect this sort of problem at the company. Shareholders have met with the company to discuss whether everybody is employed properly and that the company lives by the rules, among other things. We have heard undertakings from management but I’m not sure we can have a great deal of confidence in them.”

 

Another top shareholder said investors were becoming increasingly restless because the company’s behaviour and reputation were affecting the share price and financial results were weaker. “You can’t ignore this behaviour because it will come back to bite you. If you’re not looking after your staff it will hit the share price in the end. Now we’ve got a tranche of issues coming through that people didn’t see or didn’t think were important but when the bottom line starts moving it becomes an issue of governance and of fund management.”

Sports Direct denies 'Dickensian practices' in face of investor revolt

Read more

 

In Westminster, the shadow chancellor, John McDonnell, said: “If these allegations of breaches of the national minimum wage by Sports Direct are true, then it should be setting off alarm bells at HMRC. And I’d fully expect them to investigate and leave no stone unturned.”

 

McDonnell added: “There’s a basic responsibility that society expects from big business – to not exploit their customers, their staff or the taxpayer. There can be no idle response. To prevent large companies refusing to take their minimum wage responsibilities seriously, the government needs to increase the level of fines against recalcitrant employers.”

 

The shadow business secretary, Angela Eagle, said: “If there are allegations of non-payment of the national minimum wage, backed with evidence, these should be ruthlessly and forensically investigated by the authorities.”

 

Ian Austin, a former Labour minister and MP for Dudley North, said he had tabled a series of parliamentary questions to the chancellor and the secretary of state for business demanding an investigation into whether Sports Direct is paying the minimum wage.

 

Austin was also supported by Emily Thornberry, the shadow minister for employment, as well as local MPs Dennis Skinner and the shadow minister for electoral registration, Gloria de Piero, who all pledged to write to HMRC to ask for an investigation.

 

Ashley, whose fortune is estimated at £3.5bn, did not attend a presentation the company gave on its results to City analysts on Thursday morning, leaving the chief executive, Dave Forsey, to answer questions on the group’s half-yearly performance.

 

Forsey said Sports Direct had produced “excellent results” in a tough market and denied that publicity around the group’s treatment of staff had affected sales or relationships with suppliers.

 

“We need to do a better job of getting our side of the story over. That’s what we’ll continue to do,” Forsey said. “We are more determined than ever to make sure we are a better business and have the welfare of our own permanent staff and casual staff in the forefront of our mind.”

 

The Guardian’s investigation team found that staff at Sports Direct’s warehouse are required to go through searches at the end of each shift, for which their time is unpaid, while they also suffer harsh deductions from their wage packets for clocking in for a shift just one minute late.

 

The rigorous searches of warehouse staff – who are asked to roll up trouser legs and show the top of underwear – illustrate how concerned management is about potential theft. The practice typically adds another hour and 15 minutes to the working week.

 

Asked if Sports Direct had been contacted by HMRC, which oversees investigations into the implementation of the minimum wage, Forsey said: “That’s not something we are willing to discuss with the Guardian.”

 

The company said that the waiting time during the searches at its warehouse had been reduced. “A number of issues were raised by shareholders at our AGM, which we have addressed, for example the inconvenience experienced by some warehouse workers from the logistics of the security process when exiting the warehouse. Following a review, the process has been streamlined, which has led to a reduction in waiting time,” the statement said.

 

Forsey said “the potential bottleneck has been addressed”.

 

Casual workers were an integral component of the workforce, the retailer said. “To be clear, no warehouse workers are on zero-hour contracts, all have contracted hours with the agencies. In retail, casual workers find the flexibility offered by these arrangements very useful. We comply fully with all applicable legal requirements and will continue to keep these under review.”

 

http://www.theguardian.com/business/2015/dec/10/sports-direct-share-price-falls-following-guardian-working-practices-revelations

[Bearman 9]

 

On Thursday, the Guardian also lay bare some of the pricing policies employed by the retailer and the crisis of corporate governance at the firm, which has been widely criticised for conditions in its warehouse where workers are warned they will be sacked if they receive six black marks – or “strikes” – over a six-month period. Strike offences include a “period of reported sickness”; “errors”; “excessive/long toilet breaks”; “time-wasting”; “excessive chatting”; “horseplay”; and “using a mobile phone in the warehouse”.

 

WOOF! And here's me thinking that's Tory governance policy?

Edited December 10, 2015 by Bearman

[buster. 4,808]

Thanks to Ian and Forlan for posting the stories and links.

 

I'd say Ashely must be a bit shell shocked at the moment as various reddish flags start to ripple in the breeze down Shirebrook way.

 

He's a powerful and rich man but he's made a lot of enemies (never a good idea to take on most of the press), his way of doing business may have left some interesting trails and his seeming disregard for corporate governance may lose him some credibility with the high flying finance folk and others.

 

Good time for anyone with a gripe, a grudge, a complaint, a campaign, some information for authorities or whatever other relevant thing to press the GO button.