Mike Ashley slams Debenhams after it dragged Sports Direct’s profits

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Mike Ashley Debenhams

Mike Ashley has not held back in his anger at Debenhams, accusing the department store for not following his advice after it left a major dent in Sports Direct’s annual profits.

Speaking to The Telegraph, Ashley – who is the founder and chief executive of Sports Direct – said bosses at Debenhams continued to ignore his recommendations to make it more profitable.

In its preliminary results published this week for the period ending April 29, Sports Direct’s reported profit before tax plummeted 72.5 per cent year-on-year to £77.5 million, primarily because of a £85.4 million impact from its Debenhams holdings after its share market value crashed.

Earlier this year, Sports Direct further increased its stake in the department store chain, raising its interest from 23 per cent to 29.7 per cent.

One of Ashley’s recommendations for the retailer was charging customers for click and collect service, modelled on how Sports Direct charged customers £5 if they opted for click and collect, and were given a £5 voucher when they picked up their purchase in store.

“At some point I will be smashing into [Debenhams] over why they cannot follow anything that Sports Direct suggests. Nothing,” Ashley told The Telegraph.

He added: “Seventy percent of people will use (the voucher) and spend on average £25 in the store.

“Now let me think if that is a good thing? Oh, yes it is.”

Despite the crash in pre-tax profits, Sports Direct still managed to report positive group earnings and EBITDA.

Underlying EBITDA grew 12.2 per cent to £306.1 million – which was better than the average City forecast of £296.8 million, while group earnings increased 3.5 per cent year-on-year to £3.4 billion.

Despite this, shares in the sportswear retailer fell by as much as 11 per cent in early trading on Thursday, but they have since recovered.

Sports Direct also has a stake in House of Fraser and French Connection.

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3 COMMENTS

  1. I’ve never shopped at Sports Direct. I have shipped at Debenhams. I didn’t realise he had such a stake. Sorry, won’t be going there again.

  2. Problem with big established stores, they don’t like being told how they should trade by somebody who has come from nothing, no matter how good an idea it is,

    • Just to point out – most retailers have come from Nothing, changes like what he’s proposing take a while to implement so they would have definitely done some analytics around what their customers and whether they’d pay. Considering most customers are paying a premium to shop at Debenhams, unlike Sports Direct where they are buying at cheap rates already (plus SD’s demographic isn’t exactly premium), Debenhams customers probably wouldn’t pay £5 to have it C&C… they may as well just pay for delivery if they were doing that.

      Debenhams was first setup in 1778 (not Debenhams branded back then) and has since grown to what it is today.

      Look at most supermarkets; started out as market stalls usually.

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