Yahoo Finance Sports Direct's Mike Ashley warns he will 'smash into Debenhams' for ignoring his advice
The billionaire boss of Sports Direct says he will start “smashing into" Debenhams for not listening to his advice after the sportswear seller’s profit took an £85m hit on its stake in the troubled department store chain.
Chief executive Mike Ashley said bosses at Debenhams had ignored his recommendations to start charging customers for click and collect, a service that has seen double-digit growth at the trainers-to-hoodies retailer.
Sports Direct charges £5 to buy a product through click and collect, but hands customers a voucher of the same value when they pick up their purchase in store.
In a meeting with investors, Mr Ashley said: “At some point I will be smashing into [Debenhams] over why they cannot follow anything that Sports Direct suggests. Nothing.
“Seventy per-cent of people will use (the voucher) and spend on average £25 in the store. Now let me think if that is a good thing? Oh yes it is.”
The retailer increased its stake in Debenhams to 29.7pc in March, just shy of the 30pc threshold that would force it to make an offer for the whole business, but has been forced to write down its value after its shares fell by more than two-thirds over the past year.
Pre-tax profits tumbled 73pc to £77.5m in the year to April 29. They were also skewed by an £80m one-off gain the company made on its sale of Dunlop last year. Underlying profits, stripping out one-off items, grew 35pc to £153m.
Sports Direct's revenue grew 3.5pc to £3.4bn, mostly on the back of surging sales in its nascent US and Asian arms.
Jon Kempster, chief financial officer, denied it was a mistake to invest in Debenhams as Sports Direct attempts to land a series of commercial partnerships with the chain.
He said: “Obviously they're running hard to stand still but we’ve still got an ongoing dialogue with them.”
Sports Direct has faced relentless criticism over its treatment of workers, including at its cavernous warehouse at Shirebrook, Derbyshire, which a committee of MPs compared to a “Victorian workhouse”.
But Keith Hellawell, chairman, hit out at commentators who had portrayed Mr Ashley “as a so-called 'pantomime villain'”, insisting the company had been transformed since the entrepreneur formally took over as chief executive in 2016.
The retailer also disclosed it had set aside £5m to pay Michael Murray, who is engaged to Mr Ashley’s daughter and has been put in charge of its new “elevation strategy”, aimed at improving its share of the premium end of the market.
Mr Kempster said Mr Murray had become “very integral” to the strategy, which involves opening new stores with better interiors than its existing estate to persuade top brands such as Nike and Adidas to let Sports Direct sell their best products.
There was more bad news from another of its investments, Goal Soccer Centres, which warned investors this morning that profits for the year would be "materially below market expectations" after disruption from the "Beast from the East's" winter storms in March. Sports Direct owns an 18pc stake in the five-a-side club operator.
Sports Direct shares fell 3.6pc in early trade, to 420p.
