Sports Direct has reported Debenhams to the Financial Conduct Authority (FCA) for the way in which it has communicated the health of its finances to the market.
The retailer said Debenhams had been “at best impossibly optimistic or at worst deliberately misleading to the point that the board and chief executive have no place leading a Plc or in making public statements to the market”.
The Mike Ashley-led business, which successfully unseated chair Sir Ian Cheshire from Debenhams and removed chief executive Sergio Bucher from the board at the beginning of January, is currently agitating for the removal of the rest of the board, aside from chief financial officer Rachel Osborne. It has requisitioned an extraordinary general meeting of shareholders to do so.
Sports Direct wrote to the FCA to “give our views and put on record our concerns” about the under-pressure department store’s narrative around its financial health.
Debenhams has issued multiple profit warnings in recent months but was relatively bullish at its Christmas trading update on January 10, where it said that its “annualised £80m cost-saving programme [was] on track”.
“How can this programme be on track if you have to put out another profits warning a mere eight weeks after your January statement?” Sports Direct asked Debenhams in a letter leaked to media today.
It added: “We question the fiduciary duties being properly carried out by directors as you seem intent on getting a deal that is not in the interests of its stakeholders… we believe the majority of shareholders best interests are being undermined by the continued misleading public statement, and cloak and dagger actions in the refinancing process… although we desperately want a sustainable future for the company we just do not see this being achievable with the current course of action”.