Sports Direct founder Mike Ashley lashes out at Unite union

Ashley was challenged by the union’s assistant general secretary Steve Turner over the company’s pledge to offer shop-floor staff 12-hour contracts

Mike Ashley, Sports Direct’s founder and majority shareholder, has blamed the Unite union for the company’s problems in an angry outburst at the retailer’s annual shareholder meeting.

In a packed meeting of more than 120 people at the head office in Shirebrook, Derbyshire, Ashley was challenged by the union’s assistant general secretary, Steve Turner, over a pledge to offer shop-floor staff 12-hour contracts instead of zero hours.

Turner said he would not be surprised if few workers took up the offer as most were working much longer hours every week.

Ashley told Turner that the 12-hour promise did not mean Sports Direct would reduce hours for those who worked longer.

He said: “This is probably your fault we are in this situation because we can’t talk to you in an open manner.

“I’ve made a commitment to make a difference and I’m trying so don’t pull me down. Don’t do the whole showboating thing. It will make me turn away and the only people who suffer are people that work at Sports Direct.”

Ashley to Unite: don't do the whole show boating thing. It will make me turn away, the only people who suffer are people that work at SD

— Sarah Butler (@whatbutlersaw) September 7, 2016

Ashley’s comments came as Sports Direct faced an angry response from shareholders and employees attending its annual meeting despite the embattled retailer’s pledges to treat workers better and improve its corporate governance.

Investors criticised chairman Keith Hellawell and majority owner Ashley for the way the company was run while union representatives cast doubt on a commitment to improve working practices.

Shareholders are seeking to unseat Hellawell for presiding over a deteriorating financial performance and conditions at Sports Direct’s warehouse at Shirebrook that MPs have likened to a Victorian workhouse.

A string of major investors, including Hermes Investment Management, CalPERs, CALSTRS and the Ontario Teachers’ Pension Plan have all come out in opposition to him.

The UK investors Legal & General, Aberdeen Asset Management and Royal London have also lost patience with Hellawell, the former chief constable of West Yorkshire police who has been chairman since 2009.

Sports Direct said before the meeting that Hellawell had offered to resign at the weekend but then agreed to stay on.

The company also warned that profits would fall heavily this year, by about 21% as margins shrink, costs rise and it spends more on buying property. This sent its shares down more than 10% on Wednesday morning, however, by lunchtime they had recovered to be only 6% down.

Hellawell offered to quit before the company released a critical report on working conditions on Tuesday and with most big shareholders’ votes cast before the AGM. He told the meeting that the board had asked him to stay to lead a change in working practices, but he would stand down if the majority of independent shareholders voted against him at next year’s AGM.

Staff in the Shirebrook warehouse
Staff in the Shirebrook warehouse where the Guardian went undercover to investigate working practices. Photograph: Joe Giddens/PA

Hellawell said Sports Direct had reached a “watershed moment” and told the meeting: “You can be assured that things will improve as we move forward.”

Speaking afterwards, Hellawell told the Guardian that Sports Direct’s board had not moved to make changes earlier, despite years of criticisms, because they had not been given correct information about working conditions.

“We were acting on the information we had,” he said. “One of the biggest disappointments is we found that information was not correct.”

Euan Stirling, head of stewardship at Standard Life, Sports Direct’s biggest shareholder after Ashley, told the meeting his company had voted against Hellawell and all his fellow non-executive directors.

He said: “We are longstanding shareholders in the company and have engaged with senior executives and non-executives over many years, sadly to little effect. The responses to our inquiries have been either unconvincing or non-existent.”

Stirling said Standard Life, which holds 5.8% of Sports Direct shares, believed Ashley, who is executive deputy chairman, should stay on the board but that the rest of the board needs strengthening, particularly the “crucial role of chairman”.

The £22bn railway industry pension fund, meanwhile, said it had voted against all the board. Chris Hitchen, the fund’s chief executive, said: “It is a serious decision not to support an entire board. However … we have lost all confidence that the board of Sports Direct is acting in the interests of all shareholders.”

Keith Hellawell.
Keith Hellawell. Photograph: Darren Staples/Reuters

Sports Direct – which has admitted to problems at its warehouse, including a “six strikes” policy that put workers in fear of losing their jobs – made a series of concessions to staff before the meeting. These included guaranteed hours for shop workers on zero-hours contracts and a pledge to put a worker’s representative on the board.

It stopped short of guaranteeing hours for more than 4,000 workers at its Shirebrook warehouse, where the Guardian uncovered a climate of fear and employees effectively working for less than the minimum wage.

Hellawell told the AGM that Sports Direct had failed its employees and said: “We will stop anything we believe is unfair to our workforce.”

An employee also confronted Ashley with claims about sexual and racial harassment. Sports Direct is bringing in a nurse and a welfare officer at Shirebrook and a whistleblowing system after vowing “zero tolerance” of harassment.

#SportsDirect employee addresses Mike Ashley: raises numerous allegations of sexual and racial harassment

— Thomas Colson (@tpgcolson) September 7, 2016

The retail analyst Nick Bubb said of the earlier profit warning: “Today’s news of falling profits and soaring capital expenditure [with no board changes and no take-private move by Mike Ashley] will bring the City down to earth.”

The views of investors other than Ashley will be hard to ignore after the City regulator introduced changes to voting rules which, in some circumstances, can give greater sway to the views of minority investors.

Last year, Hellawell’s position as chairman was secure because he was supported by Ashley, who controls 55% of shares. Non-executive directors require a majority of independent shareholders to be reappointed. After a series of scandals and poor trading, more investors are expected to oppose Hellawell after 28% voted against his re-election or abstained last year.

Sports Direct said it would spend about £300m on buying and developing property this year. It said Michael Murray, the boyfriend of Ashley’s daughter and a commercial property novice, would continue to head the real-estate division.

In a presentation for an “open day” at Shirebrook, the company said it wanted to be seen as the “Selfridges of sports retail”. Big suppliers such as Adidas and Nike have grown weary of the bargain basement feel of Sports Direct’s stores and have favoured its rival JD Sports with their top trainers.

Sports Direct sought to quash speculation that Ashley, who owns 55% of the company, would capitalise on the depressed share price by buying back all of the business he founded in 1982.

Contributors

Matthew Weaver, Sean Farrell and Sarah Butler

The GuardianTramp

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