Mike Ashley once promised to finish off rival JD Sports. But after months of controversy about Sports Direct’s working practices, JD has now leapfrogged its old foe to become the UK’s most valuable listed sportswear chain.
Sports Direct’s shares have now halved since December, when the retailer issued an unexpected profit warning and a Guardian investigation revealed that temporary workers at its Derbyshire warehouse were receiving effective hourly rates of pay below the minimum wage. The shares have also shed almost 18% over the past three days, after Ashley admitted in a media interview that the company was in trouble.
Sports Direct is now valued at £2.1bn by the stock exchange, while JD is worth £2.2bn. As recently as the start of December, the companies were worth £4.3bn and £1.9bn respectively. Apart from the negative publicity afflicting Sports Direct, JD is increasingly viewed as having superior product lines.
The reverse is the latest setback for Ashley who made his reputation by creating a company that obliterated its competition, such as JJB Sports. At a presentation given to the City in 2011, when JJB was on the verge of being read its last rites, Ashley bragged: “I’ll finish off JJB first and then I’ll move on to JD.”
On Tuesday, in an interview with the Times designed to reverse months of negative headlines (£), Ashley said: “We are in trouble, we are not trading very well. We can’t make the same profit we made last year. We are supposed to be taking the profits up, they are not supposed to be coming down, and the more the media frenzy feeds on it, the more it affects us.”
The billionaire is also involved in a bitter spat with parliament’s business, innovation and skills select committee, which wants to quiz him on working conditions within the group. Ashley has refused to appear in front of the MPs, who he accuses of showboating.
