The main shareholder of the British distribution group announced its intention to leave the position of the chain of stores to relaunch the department stores operator, owned in 30%.
Widespread shock in Sports Direct. Mike Ashley, CEO and founder of the British retailer, has declared his intention to leave his post to focus on relaunching Debenhams, the department stores operator of which Sports Direct owns a 30% share.
According to the results of the last fiscal year, Debenhams registered losses of 491.5 million pounds (573 million euros) in 2018. In addition, Ashley announced that all the members of the management board of Debenhams will be dismissed except one.
The reason is the poor economic performance and the 85% fall in the value of its shares during the last year, which currently put the value of the company at 37.5 million pounds (43.7 million euros).
Mike Ashley wants to dismiss almost the whole leadership of Debenhams
Sports Direct reported that “if Mr Ashley were to be appointed to the board of directors of Debenhams during this business critical period for Debenhams, Mr Ashley would carry out an executive role.” If the entrepreneur proceeds with his plan, Chris Wootton, current deputy chief financial officer, will take the chief executive vacant post.
Debenhams in a statement announced to be “disappointed that Sports Direct has taken that action on our board of directors.” The company last month secured 40 million pounds (46.6 million euros) from credit institutions instead of accepting Ashley to refinance its debt. Debenhams has 165 stores, of which it plans to close 50, putting at risk more than 4,000 jobs of the 25,000 employees of the company.
Sports Direct closed the first half of its fiscal year with sales of 1.79 billion pounds (1.98 billion euros), representing a growth of 4.5% compared to the same period of 2017.