Ashley’s anger at Debenhams
SPORTS Direct boss Mike Ashley, pictured below, sparked fresh concerns over the future of Debenhams as he launched a scathing attack on the department store after it refused his offer of a £40million cash injection.
In a letter to Debenhams’ chief executive Sergio Bucher, Ashley warned that its shareholders, of which Sports Direct is the largest with nearly 30 per cent, risk getting “wiped out without something changing rapidly”.
Debenhams has lost more than 80 per cent of its market value this year after a string of profit warnings. It posted a £491.5million annual loss and is closing up to 50 stores over the next three to five years.
Ashley has reportedly told analysts the refusal of an interest-free loan in exchange for an increased stake was “like being offered Lionel Messi on loan and turning it down”.
He wrote: “It was the worst November for retailers in living memory. I am really concerned that the board doesn’t really seem to appreciate the position that Debenhams is currently in and their responsibility to shareholders. It is speculated that the company currently has a zero chance of survival.
“What we are offering is a very public statement of support at a critical time for the Debenhams business. If I’m sounding frustrated – well I am. We don’t want to see Debenhams fail, it’s not in our interest to see it fail.”
Debenhams said it welcomed the proposal “as a clear demonstration of their willingness to support the company”.
But it added: “As the offer came with conditions that could affect the interests of other stakeholders, while the board does not think it could accept the proposal, as presented, it has invited Sports Direct to engage as part of our broader refinancing process.”
The row came as Sports Direct posted a 27 per cent drop in half-year underlying pre-tax profit to £64.4million, dragged down by underlying losses of £31.5million at House of Fraser, the department store it bought out of administration in August.
Ashley said: “I believe the previous House of Fraser senior management team traded the business while it was insolvent for a long time. We have significant challenges in turning it around. However, I believe we have acquired a fantastic opportunity and can turn House of Fraser into the Harrods of the High Street. Sports Direct shares dropped 41p to 235½p. Debenhams fell ¼p to 5½p.