Diesel “held USC to ransom” when it pulled out of the young fashion retailer and called in a £1.3m debt last year, Sports Direct chairman Keith Hellawell has said.
At a Scottish Affairs Committee hearing on March 25, Hellawell told MPs Diesel’s decision to pull out of USC from the autumn 15 could have had a “domino effect”, causing other suppliers to leave.
USC was making a loss of £20m when it went into administration in January and was bought by another of Sports Direct’s fascias, Republic.
Hellawell said: “Diesel said in the middle of last year they would stop supplying us in December. We pleaded with them to continue working with us; [we said] if they left things would have been even more difficult [at USC].They held us to ransom.”
He added: “Suppliers have power over retailers and it’s a constant battle to keep them on board. We would label a product USC, but they would reduce or take away the product because they wouldn’t give it to Sports Direct.”
But Diesel told Drapers it made “every effort” to end the relationship with USC amicably, by agreeing to honour all outstanding commitments and giving plenty of notice. It called in the debt after USC stopped payments for delivered stock.
Hellawell said the board was not made aware that Sports Direct’s chief executive David Forsey had met with administrators at Duff & Phelps two months before staff at USC’s Dundonald warehouse were given just 15 minutes of consultation ahead of losing their jobs.
He also said there was insuffient time for a consultation period for staff as the decision was made too close to the administration. “Whatever went on before, the board wasn’t aware,” Hellawell added.
The chairman also said Sports Direct founder Mike Ashley did not refuse to attend the hearing, but rather the board decided Hellawell was best placed to answer the committee’s questions.