Mike Ashley is a deeply eccentric billionaire with thin skin and an extraordinary turn-of-phrase. In short, he is a journalist’s dream.
Exhibit A: Ashley’s appearance before the Housing, Communities and Local Government select committee last December to give evidence on the current upheaval in the retail sector.
Mike Ashley told MPs:
The High Street is “at the bottom of the swimming pool” because of the internet.
It’s not his fault.
He doesn’t “sit in an office stroking a white cat”.
Only “God” can keep all 59 House of Fraser stores open.
He is not God.
He is not Father Christmas.
Mike Ashley tells Business and Economics Editor Joel Hills: 'I accept that we lost every penny, so the blame has got to be on my toes'
All highly entertaining, however, many of Sports Direct’s shareholders aren’t feeling amused. In fact, patience with the way Mike Ashley is running the group he founded in 1982 is being stretched.
Today, one third of Sports Direct’s independent shareholders - by which I mean those who aren’t Mike Ashley - voted to unseat him at the company’s annual general meeting.
Ashley holds 62% of the group’s shares and therefore the whip hand in moments like these. Ashley received 420 million votes to re-elect him as chief executive, of which 330 million were Ashley voting for himself.
Independent shareholders have good reason to be concerned. The group’s share price has been on the slide for three years despite Ashley’s best efforts to revive it, which include spending well over £200m buying back shares.
The mood darkened in July when the publication of Sports Direct’s annual results was delayed unexpectedly by two weeks. When the results finally arrived, they contained the remarkable shock of a demand from the Belgian authorities for £600m in unpaid tax.
Last month Grant Thornton, the group’s auditor for the past ten years, quit abruptly, leaving the company with another headache. Legally, Sports Direct must have an auditor- but a replacement has proved hard to find.
Sports Direct failed to put a name to shareholders for approval today so, in theory, the matter now passes to the government. The Secretary of State has the power to impose an auditor on a public company but today Andrea Leadsom has indicated that she is willing to give the company more time to complete the public tender process.
Mike Ashley says he is keen to appoint one of the “Big 4” auditing firms, the problem is that they don’t seem that keen to work for him.
Managing Sports Direct’s accounts has become particularly challenging of late because Mike Ashley has been busy expanding his empire in an attempt to drag the brand out of the sock bin and upmarket.
Thus far, his “Harrods of the High Street” strategy hasn’t appeared to work, not least because Ashley’s eye for a bargain appears to be letting him down.
Mike Ashley’s disastrous Debenhams adventure cost Sports Direct close to £150m when the business failed, and Ashley himself describes the problems at House of Fraser - which he purchased out of administration last August - as “nothing short of terminal”.
In the last year Ashley has been furiously bidding for retailers in distress. The acquisitions of Sofa.com and Evans cycles left many scratching their heads. Jack Wills was snapped up for £12m and Sports Direct took full control of Game Digital. His bid for Patisserie Valerie ended in failure.
At the end of the day, shareholder resistance is futile. The rebellion today will be ignored. Ashley’s controlling stake in Sports Direct means he can act as he chooses, other shareholders can lump it or sell up.
That, of course, may be part of the Ashley game plan. He continues to publicly insist he has no plans to take the company private again although he gives every impression of loathing both the scrutiny and the restrictions that come with a stock-market listing.