Sports Direct shares surge despite profit plunge

Sports Direct shares hit by Mike Ashley's bluster

23 March

Mike Ashley came out swinging in his ongoing battle with MPs yesterday – but it is his own company's investors who have taken a battering.

In an interview with The Times, the billionaire founder of Sports Direct admitted the company is "in trouble", "not trading well" and that it "can't make the same profit as last year".

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He laid the blame at the door of parliamentarians who are creating what he describes as a "media circus" over the company's working practices and are trying to force him to attend a hearing in Westminster.

However, the market focused solely on the bearish remarks on earnings.

Last year, Sports Direct made pre-tax profit of £383.2m, according to The Guardian. In January, it lowered its forecasts for the current financial year for the second time in six months to between £380m and £420m. In a statement this morning, it said it expected full-year earnings "at or around the bottom of the range announced on 8 January 2016".

Shares slumped 10.5 per cent on Tuesday and at 361.4p, were a further 4.7 per cent down at 11.20am this morning. The stock has shed 56 per cent since hitting a peak of around 815p last summer.

Sports Direct has been struggling in general in the past year or so, with complaints over the tidiness of its stores and the lack of in-demand brands. It has since been hit by a range of allegations over the treatment of workers, including claims from an investigation by the Guardian that it does not meet the national minimum wage for some of its warehouse staff.

To make matters worse for Ashley, the threat of being held in contempt of Parliament for refusing to attend a hearing despite a formal summons from the business, innovation and skills committee is not going away.

Commons speaker John Bercow said yesterday that the committee is able to order the businessman to give evidence and that it could immediately assess whether or not a complaint of contempt is able to be brought, reports the BBC.

Sports Direct's Mike Ashley throws down gauntlet to MPs

22 March

Sports Direct founder and deputy chairman Mike Ashley is not backing down in a row with MPs trying to force him to attend a parliamentary hearing.

Having continued to refuse invites to appear before the business, innovation and skills select committee to answer questions on Sports Direct's working practices, the billionaire was issued with a formal summons last week and warned he could be held in contempt.

But Ashley told Sky News that is exactly what he intends to do – and that he will challenge any attempt to make him the first person to be held in contempt of parliament for decades. Powers also exist for him to be fined or even imprisoned, but they have not been tested since the Victorian age.

"The current intention is not to go because they ought to come here [the company's warehouse in Shirebrook, Derbyshire] and see it for themselves," Ashley said. "They would make a lot more informed decision if they were able to see it for themselves and then I don't think they would actually need to want to see me and carry on the media circus.

"They clearly don't care about the people at Sports Direct. In my opinion, they are just showboating. In my opinion, they are actually a joke."

Committee chairman Iain Wright told the BBC he was "disappointed" about Ashley's refusal to attend. "It is telling that he chose to give his response to the media rather than to the committee directly," he added.

In a broader interview with The Times, Ashley complained that Sports Direct was being affected by the "media frenzy" and that it is "in trouble".

He said: "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."

He laid the blame for the public "vilification" at the hands of former Labour leader Ed Miliband, who, during last year's general election campaign, used Sports Direct as an example of the sort of unethical businesses he would clamp down on as prime minister, focussing in particular on the use of zero-hours contracts and "Victorian" working practices.

Ashley said it is his actual workers who are being hurt by the ongoing attention, with the share price decline likely to leave a directly-employed cleaner with a bonus of a little more than £19,000 next year, compared to £48,000 back in 2013.

He also recently announced a £10m investment in ensuring all direct and agency staff are paid the national minimum wage and confirmed that the lowest hourly rate for all staff would rise to £7.40 next month, above the new national living wage.

Sports Direct's Mike Ashley summoned to parliament

16 March

Sports Direct founder Mike Ashley has been issued with a formal summons to attend a parliamentary hearing and discuss his company's working practices.

Members of the business, innovation and skills select committee have been trying for weeks to get the businessman to appear before them and answer questions about conditions in Sports Direct's warehouse in Shirebrook, Derbyshire. He has declined to accept a number of dates and instead invited the committee to attend the facility themselves with the media in tow.

But Iain Wright, the Labour MP who chairs the committee, has tired of the wrangling and issued an ultimatum in a new letter, reported by the BBC. In it, he formally summons Ashley to attend a hearing on 7 June and warns that a complaint for contempt may be pursued in the House of Commons if he fails to attend. Ashley must respond by 21 March.

Wright has said claims in an article in The Guardian that workers are routinely harangued and, more critically, effectively paid less than the minimum wage speak to issues that the committee keeps under regular review. It wants to hear an update on any action taken and on the progress of Ashley's own review into the matter.

The billionaire, who is deputy chairman of Sports Direct and has been criticised by investors over a range of corporate governance issues, has previously hit out at the committee for being "deliberately antagonistic" and for working up a "media circus".

A spokesman for the company said it was "extremely disappointed" that MPs had again refused an invite to visit Shirebrook and that it would respond to the latest letter in due course. Wright has previously said he wants to hold a meeting in public in Westminster to ensure transparency.

The BBC speculates on what could happen if Ashley is eventually held in contempt of the Commons, which would probably require a vote of MPs. Powers exist for him to fined or even imprisoned, but these have not been tested since the Victorian age and may be open to challenge.

Dr Andrew Blick, from the Institute of Contemporary British History at King's College London, said it was more likely that Ashley would eventually give in, as was the case when Rupert and James Murdoch initially refused an invite to attend a hearing in 2011 over phone hacking but then gave in to a formal demand.

Mike Ashley hits back at parliament 'media circus'

11 March

Sports Direct founder Mike Ashley has hit out at MPs trying to force him to appear in a public hearing in Westminster, accusing them of deliberately engineering a "media circus".

In a written response to Labour MP Iain Wright, the chairman of the business, innovation and skills select committee, Ashley pointedly did not agree a date to appear before the committee. Instead, he went on the offensive, saying he is "disgusted" at a "deliberately antagonistic stance", and re-issued an invitation for Wright and the committee to visit Sports Direct's warehouse in Shirebrook, Derbyshire.

"For the avoidance of doubt, if you wish to ensure transparency, I am happy for all forms of the media to also be in attendance at that meeting," he wrote, according to extracts quoted in The Times.

Wright had written to Ashley in complaint that the businessman had not agreed a date at which he would attend a committee hearing to discuss Sports Direct's working practices and alleged infringements of the national minimum wage.

In a surprisingly aggressive step, the politician warned that the committee had powers to compel Ashley to appear or to seek the approval of parliamentarians to have him held in contempt of the House of Commons. He also cited the committee's commitment to "transparency" as the reason behind the request for a formal evidence session rather than a visit to the warehouse.

The Guardian notes that a report compiled by legal experts for the Constitution Society previously called select committee powers to demand attendance into question.

Published around the time when media moguls Rupert and James Murdoch were called by – and agreed to appear before – the culture, media and sport select committee during its review into phone hacking in 2011, the report stated that the MPs had no formal rights to force the two to appear or to make them answer all questions put before them.

Speaking in the Commons on Thursday, Sky News reports that Chris Bryant MP, the shadow leader of the House of Commons, said parliament could "force [Ashley] to attend". He added: "He may be the 22nd richest man in Britain, but he is running a modern-day sweatshop and this House will get to the truth."

Sports Direct's Mike Ashley threatened with contempt of parliament

10 March

Mike Ashley, the founder and deputy chairman of under-fire sportswear retailer Sports Direct, has been threatened with an extraordinary summons by MPs and with being held in contempt of parliament.

The billionaire has been asked to appear before the House of Commons business, innovation and skills select committee, but despite being offered "a number of alternative dates", he has so far "not accepted any of them, nor agreed in principle to attend", according to chairman Iain Wright.

In a letter made public and reported by the BBC, Wright told Ashley that should he fail to agree to attend, the committee may "take the matter further, including seeking the support of the House of Commons in respect of any complaint of contempt".

The Times notes the letter explains that refusal of a select committee request without "good reason" can be "considered a contempt of the House". It also suggests the evidence session would be focused on the treatment of Sports Direct's junior warehouse workers, who The Guardian alleged in an article last year are effectively paid less than the minimum wage.

A spokesman for the company noted that Ashley had invited the committee to visit the warehouse in Shirebrook, Derbyshire, and said the businessman would respond to the latest letter "in due course".

Wright acknowledged the request but said they would prefer a public evidence session in Westminster, in line with a commitment to "transparency".

Alongside the claims that workers are being underpaid, which stem from examples of wages being aggressively docked for minor lateness and staff being kept back outside of working hours for lengthy security searches, are accusations of "gulag" working practices, including "haranguing" staff via loudspeakers.

"The treatment of low-paid workers and enforcement of the national minimum wage are issues that the committee will be keeping under review over the coming months," Wright's letter states.

Reputational damage inflicted by the ongoing storm is one factor in a steep fall in Sports Direct shares in recent months, with a slide of more than 50 per cent since last summer seeing it fall out of the FTSE 100 this month. Shares were 0.7 per cent lower today to 394.3p.