Sports Direct faces AGM showdown

Mike Ashley

To say Sports Direct’s annual general meeting today will have a lot of ground to cover would be putting it lightly.

The sports retailer is expected to reveal trading that is “in line with our expectations of achieving between a five per cent and 15 per cent improvement in underlying EBITDA for the current financial year, excluding the acquisition of House of Fraser”.

However, Sports Direct is likely to also be braced for backlash from shareholders over the re-election of majority-owner Mike Ashley as chief executive and Keith Hellawell as chairman.

This year’s AGM has moved from the retailer’s headquarters in Shirebrook, Derbyshire to London, and Ashley will not be attending due to “overriding demands for his time”.

Shareholder advisory group Institutional Shareholder Services (ISS) has also expressed concerns over Sports Direct’s plans to give Ashley’s future son-in-law Michael Murray £5 million in his role as head of elevation.

Only yesterday the Financial Reporting Council (FRC) requested 40 documents as part of its probe into Sports Direct’s auditor Grant Thornton.

Thornton signed off a business arrangement between the sportswear chain and Barlin Delivery, a company owned by Ashley’s older brother John.

A High Court judge yesterday agreed that the sportswear company’s approach was “one of obfuscation and delay verging on obstruction”, after the retailer failed to comply with notices from the FRC to hand over company documents.

And not least in Ashley’s mind will be the £90 million spend the retail mogul made to buy House of Fraser out of administration in August.

In the brief trading statement released before the AGM today, Ashley said: “Our strategy to transform House of Fraser into the Harrods of the high street will be a game changer.”

Last week, a number of suppliers stepped forward to support Ashley’s calls for an investigation into House of Fraser’s former directors.

Meanwhile, the Pensions Regulator is examining Ashley’s deal to acquire the department store while owing £884 million and with a pension deficit of as much as £170 million.

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