Embattled Sports Direct invests in finance team, as profits slump

SPORTS DIRECT, the sportswear retailer that has been under attack this year for its working practices, reported a 57% fall in half-year, pre-tax underlying profits to £71.6m from £166.4m in the first half of the year.

The retailer blamed its profit fall on reputational damage caused by the “unjustified” scrutiny on the company due to its poor working practices, and the fall in the value of sterling.

Despite the string of announcements in the results update, it is yet to hire a permanent CFO. Herbert Monteith remains as interim head of finance following his appointment last month. The retailer stated it had invested in the finance team – but did not offer any details.

Accounting’s watchdog also revealed today that it had nudged the company towards better reporting of its international stores.

Chairman Keith Hellawell said: “I have no doubt that the extreme political, union and media campaign waged against this company has not only damaged its reputation and influenced our customers, it has impacted negatively on the morale of our people. I begin to question whether this intense scrutiny is all ethically motivated.”

Worker representative plans

Hellawell, in a statement to the markets, said the company was making its employees a priority after an investigation uncover ‘Victorian’ working practices. He also announced that it would appoint a worker’s representative to the board “to give workers a direct voice at the highest level”. But it did not offer any details as to who that would be.

Prime minister Theresa May was criticised earlier this week for watering down proposals to put workers on boards. Instead government plans to update corporate governance, recommending a workers ‘voice’ be represented on boards.

Despite questions over governance at the retailer, the FTSE company has still not set up an independent review of its governance practices, but it said it was talking to shareholders about appointing an independent chairperson.

“Facilitating a direct dialogue between the board and our people is an initiative that we think is fundamental to maintaining the culture of the company. We continue to develop this initiative and will take into account the ongoing work of the government and other think tanks in this area ahead of any implementation,” Hellawell said.

Hellawell will stand for re-election on 5 January after he failed to receive shareholder backing at the company’s AGM in September. The chairman has come in for criticism over the year due to poor conditions for some of its employees at its warehouses.

In October, Sports Direct suffered a further blow when acting CFO Matt Pearson resigned after a year in the job. Chief executive Dave Forsey, who had been with the retailer for 32 years, also resigned.

Company plane

The company today said it had strengthened its financial knowledge on its board with the appointment of David Brayshaw, an investment banker . Brayshaw, who will join the board and audit committee with immediate effect, has more than 30 years’ experience in investment and commercial banking with Barclays Capital, HSBC, Citigroup and Pilkington among others.

Critics of the sportswear company will not be pleased by the news that founder and CEO Mike Ashley has ordered a £40m corporate jet.

“This contractual arrangement was entered into under market terms, and makes good commercial sense for the company and its shareholders,” the chairman said.

Ashley said despite the year having been “tough for our people and performance”, he continues to aim for the company to be “the ‘Selfridges’ of sports retail in the medium to long term”.