- Sports Direct warns profits will drop in its current financial year ahead of today’s AGM
- Chairman Keith Hellawell tendered his resignation last weekend but it was rejected by the board
- The retailer is bracing itself for a shareholder revolt
- Founder Mike Ashley pledges to appoint a workers’ representative to the Sports Direct board
- Ashley apologises for “shortcomings” in a letter to his 20,000 staff
Sports Direct issued a profit warning on the day of its AGM as it emerged that under pressure chairman Keith Hellawell tendered his resignation.
The sports retailer said EBITDA would fall from £380m to £300m, due to lower gross margins and higher operating costs. The profit warning comes ahead of the Sports Direct’s AGM, in which it is expected to face a shareholder revolt.
Meanwhile, it has emerged that Hellawell made an abortive attempt to resign last weekend before Sports Direct published its review into working practices yesterday. The report accused Sports Direct of running a “hierarchically and potentially oppressive” workplace.
Sports Direct’s controversial founder Mike Ashley has asked Hellawell to remain in post, despite shareholder group Pirc urging shareholders to vote against his re-election.
Sports Direct said the board has requested that Hellawell stay on “in order to assist with making further improvements”. The retailer also revealed that Ashley has “no current intention to take the company private” ahead of the AGM.
Ashley has apologised to staff and promised to appoint a workers’ representative to the retailer’s board following the review into Sports Direct working practices.
In a video released by Sports Direct last night, Ashley said the new representative would “give workers a voice at the highest level and to help ensure that all staff are treated with dignity and respect”.
The report into working practices at Sports Direct revealed that the retailer would be making a number of changes, including axing zero hour contracts for workers who wanted to be guaranteed a miniumum number of hours, scrapping the “six strikes and you are out rule” for warehouse workers and creating a welfare budget to hire nurses and welfare officers.
In his video to staff, released following the report, Ashley said: “I think it will be the one no-brainer that Sports Direct should have been doing.”
Appointing a workers’ representative is one of the ideas put forward by Theresa May to reform big businesses just prior to her becoming Prime Minister.
Ashley added: “I want to be the pioneer who gets it done…I am going to make it happen.”
It is not clear how the representative will be chosen, but it is expected that he or she will be elected.
In an email sent to his 20,000 staff yesterday, Ashley apologised for “shortcomings” in the retailer’s working practices.
He said: “I have always believed that Sports Direct was built by the great people who work here. I therefore wish to apologise to you on behalf of myself and the board for the shortcomings that have occurred in our working practices, which have been identified in the report.”
The tycoon also vowed to turn the business into “one of the best employers in Britain”, although admitted that this “will not happen overnight”.