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By
Reuters
Published
Jun 7, 2016
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'Shocked' Sports Direct founder says to act on failings

By
Reuters
Published
Jun 7, 2016

Mike Ashley, the billionaire founder of British retailer Sports Direct, defended the business he built from scratch but told MPs he would work to fix some shocking failings during heated exchanges in parliament.

Ashley, who is executive deputy chairman of Sports Direct and owns 55 percent of its equity, conceded on Tuesday that the firm had effectively paid some warehouse staff below the statutory minimum wage by requiring them to queue for security checks on their own time.


Sports Direct founder Mike Ashley




The 51-year-old executive also told parliament's business committee that Sports Direct may have outgrown his ability to manage it, having opened his first shop in 1982.

"Some things have come as a bit of an unpleasant surprise," he said of a personal review of working practices he launched in December after criticism from media and politicians.

He said security bottlenecks when checking for staff theft at the end of shifts at Sports Direct's main warehouse in Shirebrook, central England, had led to workers earning below the legal minimum hourly wage for a short period.

"I have discovered some issues and hopefully I've addressed some of those issues," he said.

Ashley also said allegations of Sports Direct employees being dismissed without notice and instances of sexual harassment were unacceptable if true.

"Some of the things you've said to me would actually lead me to believe that it (Sports Direct) has definitely outgrown me, because that's shocked me what you said today," he said.

In a letter to the retailer's 27,000 staff late Monday he had said CEO Dave Forsey would not be taking his four-year share bonus, worth up to 4 million pounds ($5.8 million).

"CULTURE OF FEAR"

Sports Direct, a mainstay of Britain's shopping streets offering low priced sports goods through 450 stores, has had a torrid year so far, issuing two profit warnings.

Its shares have slumped 37 percent, and it has lost its place in Britain's FTSE 100 index of leading shares. Ashley has said "media intrusion" has hurt the company's results.

Luke Primarolo, regional officer of the Unite trade union, told the committee there was a "culture of fear" at Shirebrook, which employs over 3,000 agency workers.

He said one worker felt so under pressure to keep working she gave birth in the warehouse toilet.

Ashley, familiar to many Britons as the owner of football club Newcastle United, grew exasperated at times during nearly two hours of questions.

He said the rapid growth of internet retailing meant it would have been "physically impossible" for Sports Direct to grow at the rate it had without using thousands of agency staff.

Investors expressed concern about the picture of the company that emerged.

"In our view, the long list of corporate governance failings at Sports Direct, highlighted at today's hearing, are a contributing factor in its fall from the FTSE 100," said Piers Hillier, Chief Investment Officer at Royal London Asset Management, which owns shares in the firm worth nearly 4 million pounds.

"Ashley frequently suggested...that he has no oversight or knowledge of large parts of the company’s business; this is extremely concerning for investors."

Ashley's appearance at the hearing followed a standoff with lawmakers. For four months he had refused to attend, accusing them of creating a media circus, but he changed his mind on Sunday.

($1 = 0.6887 pounds)

 

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