Sports Direct tycoon Mike Ashley was more than £80 million poorer today as shares in the retailer plunged in the wake of the company’s shock £604 million tax bill.
A shambolic session on Friday saw the firm deliver its interim results more than 10 hours behind schedule — after a previous two-week delay — as well as jettison its finance director.
Investors’ first chance to react to the surprise tax demand from Belgium saw shares dive as much as 28% at one point, the biggest fall in more than a decade, before settling 11% or 25.4p lower at 208.5p.
The decline wiped £83 million off the value of the Newcastle United owner’s 62% stake in the business he founded more than 30 years ago.
Alongside the tax bill, Ashley’s outspoken Friday evening press conference compared his £90 million House of Fraser purchase last year to a “broken-down car” and said the rescued firm could be in terminal decline. Meanwhile chief financial officer Jon Kempster resigned “to pursue other interests” and will be replaced by deputy finance chief Chris Wootton following the company’s annual shareholder meeting in September.
Analysts and investors were scathing over the company and sceptical of its attempts to move the business away from its “pile ’em high, sell’em cheap” strategy by revamping stores to attract better quality brands.
Peel Hunt analyst Jonathan Pritchard said the “home truths about the core Sports Direct business were pretty shocking and management seems to be out of ideas”.
He added: “We are disappointed how Friday played out but it’s far more worrying that Sports Direct now seems to be strategically snookered, checkmated and clean bowled. The shares are hard to value, but are surely only for the very brave.”
Investors also slated the running of the business for an amateurish and confrontational approach to the City since floating in 2007.
Aviva Investors’ David Cumming told the BBC: “Sports Direct is almost a case study in failed corporate governance. Anyone who cares about proper oversight, control and governance of the CEO shouldn’t really be an investor in this company.”
