Under-fire Sports Direct opens the door after criticism
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A man walks past a Sports Direct store on Oxford Street in London, Britain July 22, 2016. REUTERS/Paul Hackett
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By Sarah Young
LONDON (Reuters) - Vilified retailer Sports Direct (NYSE: SPD) takes another step in its attempted rehabilitation next week when it hosts members of the public and the media at its headquarters in northern England, slated for working conditions akin to a Victorian workhouse.
The 450-store sportswear chain, known for discount offers such as mens' polo shirts priced at 5.50 pounds ($7.33), has been condemned by politicians for effectively paying workers less than the minimum wage and by shareholders for poor corporate governance.
In a u-turn of its previous closed-door attitude, the group which also owns brands such as Lonsdale and Dunlop said last week it would invite non-shareholders to an open day on Sept. 7 to coincide with its annual shareholders' meeting (AGM), access to which has traditionally been restricted.
Attendees will be permitted to observe the AGM before being allowed to question the board, of which billionaire founder Mike Ashley, also owner of Newcastle United soccer club, is a member, then touring the site at Shirebrook in Derbyshire.
The Shirebrook warehouse was slammed in a report by British lawmakers which said its working practices were closer to that of a Victorian workhouse than a reputable retailer.
The poor publicity has already prompted a company response and in August thousands of Sports Direct workers were told they would receive back pay totaling 1 million pounds ($1.3 million after their wages fell short of the legal minimum.
Some investors in the chain, in which Ashley owns 55 percent, have rebuked its management and called on the board to launch a further independent review of the way it is run.
Yet an open day in itself is unlikely to appease the investors, given its shares languish 43 percent down this year, a drop which has wiped hundreds of millions of pounds off the value of Ashley's holding.
Investors have called for a review of board oversight, related party transactions and potential conflicts of interest, employment practices, acquisition strategy, oversight of supplier relationships and the management of stores.
Voting at the AGM will give them the chance to express their frustrations with the company, which has issued two profit warnings this year, most recently in March.
Shares in the firm also plunged after Britain voted to leave the EU, dragged down by the collapse in the value of the pound against the dollar and the fact Sports Direct had not hedged its currency for such an outcome.
Legal & General
Sports Direct is also due to publish next week a report on working practices following an internal investigation.
($1 = 0.7492 pounds)
(Editing by David Holmes)
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