Sport Direct’s Mike Ashley faces shareholder unrest at annual meeting

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Mike Ashley faced shareholder unrest again at Sports Direct’s meeting with investors on Wednesday.

Some major investors believe founder Mike Ashley, who owns more than 62%, has too much control over the retailer.

The firm has been criticised for several “strange missteps”, including its House of Fraser purchase.

A major bone of contention at the meeting was the appointment of an auditor, after Grant Thornton resigned in August.

Tom Powdrill, of investor advisory group Pirc, said that if Sports Direct cannot appoint an auditor at the close of the meeting, the Department for Business, Energy and Industrial Strategy has the power to step in if necessary.

He told the BBC that the situation at the company is “is absolutely unprecedented”, adding: “This is Sports Direct all over. It has set a number of precedents, unfortunately they are all bad ones.

“Sports Direct has been through a very turbulent period and made a number of strange missteps,” he added, citing the House of Fraser acquisition, a delay in publishing its results, and problems appointing an auditor.

Pirc opposes the re-election of Mr Ashley as chief executive. However, Mr Ashley holds more than 62% of the shares of the firm, so has a controlling interest.

Sports Direct’s relations with some investors have been turbulent for a number of years. For example, in 2016 shareholders moved to depose the then chairman Keith Hellawell.

The media was barred from the meeting, but Press Association city editor Simon Neville bought one Sports Direct share on Monday, which allowed him to attend.

He tweeted that the firm said it is “in the middle of a process” with regard to getting an auditor, and that the board wouldn’t answer whether Sports Direct will appoint one soon.

Investor unrest

Shareholder ISS has also recommended voting against Mr Ashley’s re-election, citing “material failures of governance and risk oversight, many of which remain unresolved” over recent years.

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Mr Ashley, who owns Newcastle United, faced a small protest from football fans ahead of the meeting

Fidelity International’s Maike Currie told the BBC that shareholders have questions over the firm’s performance and Mr Ashley’s recent shopping spree. The businessman has bought a number of ailing retailers in the last two years.

Shares in Sports Direct are down by about 25% in a year, and suffered a big drop in July after the Belgian government claimed Sports Direct owed it €674m (£605m) in taxes.

Ms Currie said there were doubts over Mr Ashley’s decision to buy House of Fraser and Jack Wills. There are also reports that Sports Direct is bidding for High Street jeweller Links of London.

Mike Ashley already owns large swathes of the High Street. He bought House of Fraser for £90m last year saying he wanted to turn it into the “Harrods of the High Street”.

Sports Direct later said it regretted the acquisition, describing problems at House of Fraser as “nothing short of terminal”.

He has also bought Evans Cycles and owns several sportswear brands, upmarket clothing outlets Flannels and Cruise, and lingerie firm Agent Provocateur. Sports Direct is also in the process of taking control of Game Digital.

Earlier this year, he tried to become chief executive of Debenhams, but instead his stake in the chain was wiped out when the retailer was taken over by its lenders.

Mr Ashley has also failed in a bid for music retailer HMV and pulled out of bidding for cafe chain Patisserie Valerie.

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