Frasers Group voices fury over Studio collapse, calls for criminal penalties for listed company bosses

Mike Ashley has snapped up more Hugo Boss shares
Mike Ashley has snapped up more Hugo Boss shares
// Mike Ashley’s Frasers Group has called for urgent reform of the corporate governance of listed companies, and urged for all collapses to be investigated and criminal penalities for wrongdoing
// Frasers was the largest shareholder in Studio, which it bought out of adminitration earlier today

Mike Ashley’s Frasers Group has sounded its fury over the collapse of Studio, the online retailer it bought out of administration today.

Frasers Group, which was the largest shareholder in Studio, said that UK corporate governance needed urgent reform so those involved in business failure should be investigated and sanctioned.

The retail group called for full investigations of all listed businesses that collapse and said fines and criminal penalties should be imposed on individuals found complicit in or responsible for wrongdoing that contributed to the company’s failure.

As a shareholder, Ashley has had his fingers burned several times in recent years following business collapses, with his investments in Debenhams and Goals lost when the companies fell into administration.

Frasers Group said in a stock exchance announcement: “If the regulation of business is to have any purpose at all it should be in ensuring that businesses and jobs do not simply disappear overnight, damaging lives, eroding shareholder value, and tarnishing the reputation of the UK business system as a whole.”

“Frasers does not see the failures of listed public companies such as Debenhams, Goals and Studio Retail Group as isolated incidents but rather as manifestations of systematic governance failures and a lack of corporate and individual accountability.

The retailer pointed out that it had “long advocated” that Studio was in need of a strategic review to protect shareholder value and wrote to the company’s management to voice its concerns that it was taking a conservative view on accounting estimates and judgements. 


READ MORE: Mike Ashley’s Frasers Group buys Studio out of administration


Frasers, which owned close to 30% of Studio prior to its collapse, voted against the re-election of Studio’s chief financial officer in 2019, although he re-elected with 58.06% of the vote.

Frasers claimed that Studio had “buried its head in the sand whilst the world around it changed”. It also laid the blame for its demise on its management team.

“It is clear that the fundamentals of its business were, at best inadequately scrutinised by its board and/or advisors to the business, or at worst, deliberately concealed as the business entered its death spiral.”

The retailer also claimed that Studio’s claim that it needed a £25 million loan to save it from collapse were “a gross underestimation of the scale of the issues facing the business”.

Ashley’s Frasers Group said that the Financial Reporting Council, Audit Reporting and Governance Authority, and Financial Conduct Authority needed both increased enforcement powers and resource to police the corporate governance of listed companies and urged them to “act decisively as a deterrent to others.”

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3 COMMENTS

  1. I’m very much for this holding people accountable for company failures however Directors and co know how to past the book off to each other and the investigation would take forever and a day as no director or big wig would take accountability for failures only success. What needs to happen in the retail world is a major crack down on cronyism and nepotism. 90+ % of these chiefs are only at the top due to this. class example stev rowe M&S. his dad was very high up so he went from a Saturday kid to a chief very quickly. Other things that need to happen is that retailers should chop from the top down. Sack Directors before attacking there shop floors. It’s a Director that decided to open that store within that location not the staff that man it. Also directors need to stop announcing store revisits as stores just get bodged with staff and stock from surrounding stores covering up store, area & regional managers underperformance. I know as a retail manager myself, my departments are run on a skeleton staff until a visit happens and staff budgets become endless and when I actually need staff to cover holiday & sick or do big seasonal changes we can’t as the store manager and above have spent excessive wages on bodging the store for a Director visit to make them selves look good.I’ve never understood how a Director can walk round a store and look at previous weeks sales and say you’ve been underperforming for a while but look at how perfect the store is, can’t understand its poor performance? If they are unannounced it would flush out a lot of poor management from in store to area & regional. If retailers crack these issues a lot of retailers wouldn’t/won’t gone/go to the wall.

  2. As usual the multi millionaire wants to make as much money as possible from the failure of a company and to get as much as they can for as little as possible. Greedy greedy greedy.

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