Sports Direct’s chief executive Dave Forsey told me recently it had to do more to tackle its tarnished reputation.
The need seems even more urgent now following the latest media furore engulfing the controversial Mike Ashley-controlled firm.
The Guardian’s allegations about Sports Direct’s working practices at its Shirebrook warehouse prompted the Institute of Directors to brand it a “scar on British business”. In Parliament yesterday Shadow business minister Chuka Umunna called Sports Direct a “bad advert for British business”.
The retailer has faced similar attacks in the past - both Channel 4 and the BBC investigated the company over its behaviour.
But will the latest storm prompt a significant reaction from Sports Direct?
On past form, I doubt it.
What struck me from my interview with Forsey was that he believes the rows reflect the company’s failure to put its side of the story across, rather than an acknowledgement it is doing anything wrong.
Defending itself last week, the retailer said it has “streamlined” security procedures for staff leaving its warehouse - there had been claims that the time taken represented unpaid working time. Sports Direct also maintains that its shop staff like the “flexibility” of zero-hours contracts.
Sports Direct will take some heart from the fact that business minister Nick Boles called for clear evidence before ther is any prospect of HMRC investigating whether it is effectively paying below the minimum wage as a result of the end of shift security checks.
Share price tumble
However, one thing Mike Ashley will find hard to ignore, as majority shareholder, is the state of Sports Direct’s share price. It sits at a 12-month low after a disappointing set of half-year results, while the latest revelations and the retailer’s corporate governance structure is also frightening investors.
If customers begin to take note of the media storm this could also hurt the retailer. But ultimately you have to wonder whether Sports Direct shoppers care about how they get a cheap pair of trainers.
Indeed Sports Direct investor Crispin Odey, the well-known hedge fund manager, points the finger partly at shoppers, saying: “We have to recognise consumers’ desire for cheap shoes is how you end up with these problems. Shoppers need to understand that these prices are only possible because every cost has been analysed and reduced as far as it will go.”
Retail’s reputation as an employer has sometimes suffered in the past. But this appears to be a targeted attempt by newspapers, politicians and trade unions to get one company to behave better. The industry as a whole should not fear widespread repercussions from the rows.
For Sports Direct though, the scrutiny looks likely to continue. The head of steam about its apparent practices is not going to go away but as long as Forsey thinks it has done no wrong, expect more turbulence to come.