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Mike Ashley’s perfect storm

Criticism over zero-hour contracts, slowing growth at Sports Direct and the controversial dismissal of USC factory workers have all culminated in a perfect storm for retail mogul Mike Ashley.

In the most recent twist to the sportswear sector saga, which has had the retail world, not least the Drapers news desk, enthralled over recent weeks, the publicity shy Ashley is to have his dirty laundry washed in public.

As mooted by Drapers earlier this month it has been confirmed Ashley will be called to Westminster by the Scottish Affairs Committee to answer questions on the controversial dealings at its young fashion firm USC, which was sold in a pre-pack administration to another of Ashley’s companies Republic, as well as his firm’s use of zero-hour contracts.  

The date of the hearing is yet to be set but the committee has just five weeks before parliament is dissolved to make way for the general election in May.

Ian Davidson MP, the Scottish Affairs Committee chairman said he was inviting USC, the Sports Direct management and Ashley as the “directing influence” of this group to meet the committee.

“Mike Ashley is clearly the guiding influence behind the group and we want to have him there. We have had people in the past who didn’t have enthusiasm for coming in front of the committee and eventually they understood that the reputational damage from not coming along was much greater than not coming.”

He added: “Eventually he will realise that he is not bigger than parliament.”

Ouch.

The news comes in a less than stellar week for the mogul during which it was revealed Jeff Blue, a senior director charged with leading mergers and acquisitions for Sports Direct, had left the company at the end of last year. He is understood to have decided not to renew his two-year contract.

Sports Direct also announced a slowdown in growth for its third quarter this week, with group sales increasing just 2.6% to £771m in the 13 weeks to February 18 due to a “weak winter” across Europe. The worst performing section of the business was the premium lifestyle arm, where sales dropped 0.4% to £70.9m and gross profit dipped 2.8% to £27.6m.

So is the mighty Mike’s empire coming away at the seams?

I doubt it. Something tells me that Ashley has another trick or two up his sleeves and while the axed workers in Dundonald are facing a rather bleak start to the New Year, Ashley will walk away from this latest saga unscathed.

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