Business World

Monday 24 October 2016

Sports Direct founder Ashley faces grilling from UK lawmakers

James Davey

Published 07/06/2016 | 07:04

Newcastle owner Mike Ashley
Newcastle owner Mike Ashley

Mike Ashley, the billionaire founder of Sports Direct, is set to face tough questions from British lawmakers on Tuesday over working practices at his sportswear firm.

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After a four-month standoff Ashley finally agreed on Sunday to appear before the lower house of parliament's Business, Innovation and Skills select committee.

He had previously refused to attend, saying he would comply only if lawmakers first visited Sports Direct's warehouse and headquarters in Shirebrook, central England.

They declined. Faced with a protracted legal battle, Ashley had a change of heart, agreeing to attend without pre-conditions "in order to defend the good name of Sports Direct."

The retailer has been criticised by media and politicians for the treatment of warehouse workers at Shirebrook. It has rejected the charge that it effectively pays some staff below the national minimum wage by requiring them to queue for security checks on their own time at the end of a shift.

In December Ashley pledged to oversee a review of all agency worker terms to ensure Sports Direct is meeting its legal obligations and providing a good environment for its workforce.

The last few months have seen a dramatic decline in fortunes for a firm which has a presence on most British shopping streets, offering low priced sports goods through its 450 stores.

The company has issued two profit warnings this year, its shares have slumped 37 percent in 2016 and in March it lost its place in Britain's blue-chip FTSE 100 index of leading shares.

In terms of market capitalisation it has also been overtaken by rival JD Sports Fashion.

Ashley, who is deputy chairman of Sports Direct and holds 55 percent of its equity, has said "media intrusion" has hurt the company's results.

Analysts say its problems are more to do with poor moves on acquisitions, increased competition and consumers growing tired of its cluttered stores.

The parliamentary hearing is likely to be an uncomfortable one for Ashley, who apart from analysts' meetings for financial results rarely makes public appearances.

"The reason Mike Ashley is normally kept away from the press etc is that he speaks his mind too freely, so it will be interesting to see if the MPs goad him into letting his guard slip," said independent retail analyst Nick Bubb.

"Ashley will be keen to show that he has nothing to be ashamed of," he added.

As well as his retail business, Ashley is familiar to Britons as owner of soccer club Newcastle United, relegated last month from the Premier League.

The select committee will also question representatives from Transline and Best Connection Group, the two main employment agencies used by Sports Direct, as well as the Unite trade union, which has been critical of Ashley.

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