The company, which has been under fire for the past year for the poor treatment of its warehouse staff and a lack of corporate governance, is expected to divide views on its progress after sealing another deal with a member of Mr Ashley’s family and spending $51.1m (£40.4m) on a new corporate plane, reports The Telegraph.
Despite a City watchdog investigation into an arrangement between Sports Direct and an overseas distributor owned by the tycoon’s brother, John Ashley, the company has revealed it has entered into an agreement with a beauty company owned by Mr Ashley’s youngest daughter, Matilda. The company said that Ms Ashley’s business, Double Take, will license the exclusive rights to a beauty brand called Sports FX with royalties and fees paid in 2019.
The FTSE 250 business also uses Mr Ashley’s eldest daughter’s boyfriend Michael Murray to provide property services, including overseeing the recent £108m purchase of an Oxford Street property for the group’s upmarket Flannels chain.
Despite raising eyebrows by introducing another family connection, Sports Direct also announced the hiring of former Barclays Capital and HSBC banker David Brayshaw as a non-executive to its depleted board. Within the last three months long-serving chief executive Dave Forsey and acting finance chief Matt Pearson have resigned.
Meanwhile the retailer said it would take delivery of a new corporate jet in the coming weeks “to facilitate efficiencies relating to the use of management time and the pursuit of the group’s strategic priorities”.
In the six months to October 23, Sports Direct’s pre-tax profits slumped by a quarter to 25pc to £140.2m. But if the millions of pounds made by selling shares in its arch rival JD Sports are excluded, pre-tax profits crashed 57pc to £71.6m. The company also revealed that it had suffered a £55.8m loss on the lack of foreign exchange hedging.
Sales rose by 14.2pc to £1.6bn, helped by its international business and revenue from Irish department store Heatons, which it bought last year.
Earnings before interest, tax, depreciation and amortisation – considered a crucial measurement of Sports Direct as it measures the cut-price retailer’s margins – fell by a third to £145.3m.
Mr Ashley said: “The last six months have been tough for our people and performance. Our UK sports retail business continues to be the engine of Sports Direct, but our results have been affected by the significant deterioration in exchange rates, and our assessment of our risk relating to our stock levels and European stores performance.”
Chairman Keith Hellawell, who faces another shareholder rebellion, said that the “extreme political, union and media campaign waged against this company has not only damaged its reputation and influenced our customers, it has impacted negatively on the morale of our people.” “I begin to question whether this intense scrutiny is all ethically motivated.”
A majority of independent investors voted against Mr Hellawell’s reappointment and as a result, he has to stand for re-election on 5 January. However, he continues to have majority shareholder and founder Mr Ashley’s backing and so it is unlikely he will be voted out.