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Sports Direct investors deserting after founder Mike Ashley admits it is 'in trouble' | |
(about 7 hours later) | |
Sports Direct investors deserted Britain’s largest sporting goods retailer in droves yesterday after its founder admitted it was “in trouble”. | Sports Direct investors deserted Britain’s largest sporting goods retailer in droves yesterday after its founder admitted it was “in trouble”. |
The controversial billionaire Mike Ashley said the company’s profits were falling and laid the blame at the feet of MPs, with whom he is in a very public battle over his refusal to appear before them in Westminster to answer questions about Sport Direct’s workplace practices. | The controversial billionaire Mike Ashley said the company’s profits were falling and laid the blame at the feet of MPs, with whom he is in a very public battle over his refusal to appear before them in Westminster to answer questions about Sport Direct’s workplace practices. |
“We are in trouble – we are not trading very well. We can’t make the same profit we made last year,” he said in a media interview. “We are supposed to be taking the profits up – they are not supposed to be coming down. And the more the media frenzy feeds on it, the more it affects us.” | “We are in trouble – we are not trading very well. We can’t make the same profit we made last year,” he said in a media interview. “We are supposed to be taking the profits up – they are not supposed to be coming down. And the more the media frenzy feeds on it, the more it affects us.” |
Sports Direct shares plunged 11 per cent or 44.6p to 379.2p, wiping £267m from the company’s market value. The stock is now down more than 30 per cent so far this year – a slide that has led to it being demoted from the blue-chip FTSE 100. | Sports Direct shares plunged 11 per cent or 44.6p to 379.2p, wiping £267m from the company’s market value. The stock is now down more than 30 per cent so far this year – a slide that has led to it being demoted from the blue-chip FTSE 100. |
The company did not give any formal notice of a change to its profit guidance. | The company did not give any formal notice of a change to its profit guidance. |
In a January profit warning brought on by “a deterioration of trading conditions” and “unseasonal weather over the key Christmas period”, it said it was “no longer confident” of meeting its £420m profit target for its full year ending in April and underlying profits could fall as low as £380m. | In a January profit warning brought on by “a deterioration of trading conditions” and “unseasonal weather over the key Christmas period”, it said it was “no longer confident” of meeting its £420m profit target for its full year ending in April and underlying profits could fall as low as £380m. |
The downturn coincides with a stand-off between Mr Ashley and the Commons Business, Innovation and Skills Committee. On Monday the Newcastle United owner reiterated his intention not to give testimony before the committee despite a formal summons to Westminster. | The downturn coincides with a stand-off between Mr Ashley and the Commons Business, Innovation and Skills Committee. On Monday the Newcastle United owner reiterated his intention not to give testimony before the committee despite a formal summons to Westminster. |
The MPs’ demand – which could trigger a rare use of centuries-old contempt of Parliament proceedings – follows concerns about the retailer’s extensive use of controversial zero-hours contracts and claims about the treatment of workers at the firm’s Shirebrook warehouse in Derbyshire, which was likened to a “gulag” in a press investigation. | The MPs’ demand – which could trigger a rare use of centuries-old contempt of Parliament proceedings – follows concerns about the retailer’s extensive use of controversial zero-hours contracts and claims about the treatment of workers at the firm’s Shirebrook warehouse in Derbyshire, which was likened to a “gulag” in a press investigation. |
Sports Direct has since assessed its employment policies – Mr Ashley conducted the review – and confirmed it will pay all staff and agency workers more than the minimum wage. | Sports Direct has since assessed its employment policies – Mr Ashley conducted the review – and confirmed it will pay all staff and agency workers more than the minimum wage. |
Mr Ashley said it was Sports Directs workers who would bear the brunt of the current “media circus”. The value of a new staff bonus share payout scheme has halved in its first year because of the company’s collapsing share price, he explained. | Mr Ashley said it was Sports Directs workers who would bear the brunt of the current “media circus”. The value of a new staff bonus share payout scheme has halved in its first year because of the company’s collapsing share price, he explained. |
He also claimed that former Labour leader Ed Miliband had already cost staff £60m in bonus payments by accusing Sports Direct of Victorian working practices during last year’s election campaign. | He also claimed that former Labour leader Ed Miliband had already cost staff £60m in bonus payments by accusing Sports Direct of Victorian working practices during last year’s election campaign. |
“The shares are like wallpaper to me, but for the staff this is life-changing,” he said. | “The shares are like wallpaper to me, but for the staff this is life-changing,” he said. |
“Once you start to spiral a company down, you lose the momentum. | “Once you start to spiral a company down, you lose the momentum. |
“We have all seen the effect that negative media can have on companies, and that spiral is growing.” | “We have all seen the effect that negative media can have on companies, and that spiral is growing.” |
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