Mike Ashley, founder and majority shareholder of Sports Direct, is trying to morph from prole grinder to paternalist as a crunch shareholder vote impends. Like a Victorian mill owner falling penitently to his knees in chapel, he is pledging to “treat all staff with dignity and respect”. A report from law firm RPC on the treatment of workers is littered with mea culpas from the sportswear retailer.
Mr Ashley is promising a new enlightened era at the Shirebrook warehouse, the subject of fury among MPs following revelations by undercover reporters from the Guardian. There will be a nurse, a welfare officer, a gym and English lessons for the predominantly foreign workforce.
Shirebrook will lack the swimming baths, parks and boating lake that the philanthropic George Cadbury provided for former slum dwellers at his Bournville chocolate factory in Birmingham. But the changes should represent an improvement. They include: the suspension of the “six strikes and you’re out” policy operated by agency labour suppliers; an end to the alleged shaming of workers by tannoy; and an opportunity for employees to switch from zero-hours to minimum-hours contracts.
Often, investors appear to care very little about the employees of the businesses they own. But in the case of Sports Direct, minority shareholders see staff welfare — or the lack of it — as expressive of the group’s shambolic governance. Many are due to vote against the reappointment of chairman Keith Hellawell. Any power he might have to represent them is undercut by the position of Mr Ashley, a 55 per cent shareholder, as “deputy executive chairman”.
Mr Ashley cannot hope to forestall that censure, or support for a motion requesting an independent review of governance, both of which he can easily vote down. He is however giving a slim inch of ground by asking RPC to examine governance and report back in a ridiculously leisurely 12 months.
This is an inadequate response. Shares in Sports Direct, which have collapsed, should remain deeply discounted until it appoints a genuinely independent chairman and non-executives. Mr Ashley should take a back seat managerially or buy out minorities at a stiff premium.
Tuesday’s report shows he only edges towards accepted norms with the hot breath of an angry mob on the back of his neck. The contrast is with Victorian paternalist bosses who always aimed to surpass them. To paraphrase a barb against US politician Dan Quayle: “We knew the Cadburys, Mr Ashley, and you’re no George Cadbury.”
The public is not bovvered about Brexit. One did one’s best to panic them by pointing out Canada has been negotiating an EU trade deal for years and has so far only reached an outline agreement on maple syrup exports. But the public responded by producing a smartphone and displaying a picture of a Persian cat having its tummy tickled.
Even shares in housebuilders are bouncing back, after losing two-fifths to one-third of their value. Redrow, which announced record full-year profits on Tuesday, has, for example, recovered to within 4 per cent of its pre-poll level. Where did it all go right?
Chairman Steve Morgan says there has been “virtually no impact” from the vote. Undersupply of homes has worsened with the closure of smaller developers. Homebuyers are chipper, thanks to government subsidies.
All very embarrassing, if, like Lombard, you saw the vote as a disaster. It might still be. Stocks are high. But their predictive ability has been compromised by action from the Bank of England needed to justify pre-poll Jeremiads. Consumer confidence creates economic conditions, as well as reflecting them, though. As for Redrow, Peel Hunt reckons it looks cheap. That is a reasonable assessment, given the success of Mr Morgan’s bold expansion into the south-east. No dithering nervousness from him, either.
The right rotter
Brummies sometimes moan the city lacks high-calibre leadership. That would change if Andy Street, managing director of John Lewis, gets the new job of mayor for the urban West Midlands.
Mr Street is credited with steering the store chain to an enviable position in middle market retailing and was “most admired” company boss in 2014.
He attended King Edward’s, the Birmingham school immortalised in Jonathan Coe’s poignant novel The Rotters’ Club. At one reunion he resolved a bar-room stand-off near Broad Street without violence, a feat beyond most UN peacekeepers.
Mr Street is expected to declare his candidacy on September 19. If he wins, he would have to tell the mayor of Brum’s twin city Lyon what he meant by describing France as “sclerotic, hopeless and downbeat”. He would also need to explain to Brummies why he waited until 2015 to open a store in the city. Harvey Nicks beat John Lewis to it by more than a decade.
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