The morale of staff at Sports Direct has suffered, says chairman Keith Hellawell, but here’s news to cheer them up: profits may have halved but the company can still afford to spend £40m on a new corporate jet. Employees can even hire it themselves for a jolly – though they will have to pay “open market rates”.
But the arrangement that will surely infuriate outside shareholders is the deal whereby Sports Direct will buy cosmetics – under that must-have brand Sport FX – from a company where founder Mike Ashley’s 20-year-old daughter, Matilda, is a director.
Matilda’s outfit is called Double Take, which is probably what shareholders did. Yes, Sports Direct really has responded to accusations of nepotism – after a distribution deal with Ashley’s brother and a potentially lucrative property consultancy for the boyfriend of Ashley’s other daughter – by doing this deal. Critics said Sports Direct is run as a personal fiefdom rather than a public company. Ashley, it seems, doesn’t care what they say.
Chairman Keith Hellawell, though, sounds jolly angry about how the media, politicians and trade unions have “waged” an “extreme campaign” against Sports Direct. “I begin to question whether this intense scrutiny is all ethically motivated,” he said.
Unfortunately, the former chief constable of West Yorkshire didn’t say what conclusions he has reached. Here are a few facts to help his inquiries. This paper’s exposé of working conditions at the Shirebrook warehouse was honoured at the British Journalism awards this week. The business select committee’s report was a cross-party affair and supported the thrust of the complaints made by Unite, the trade union, for many years. Sports Direct workers have been awarded £1m in back pay as a result of the scrutiny and the company itself has admitted to “shortcomings” and pledged to do better.
No doubt, life under the spotlight is uncomfortable. But there is a simple remedy, at least for Hellawell. After seven years in the job, and having failed to spot a crisis that was brewing for ages, he could resign. That was the wish of a majority of outside shareholders at the annual meeting in September.
Ashley, with his 53% stake, saved his chairman but it remains hard to see how Sports Direct can genuinely claim to have turned a corner while Hellawell remains in post, raging impotently about scrutiny that would be applied to any public company.