Scandals force JD Sports to toughen governance
JD SPORTS is overhauling its business after a string of run-ins with the City watchdog led to the exit of its longserving boss.
The clothing and trainer retailer has told investors that a “number of regulatory issues” have led it to conclude that more board experience is needed alongside better risk controls. The company announced a major rejig in governance that could take 18 months.
The decision comes after former executive chairman Peter Cowgill stepped down in May “as a consequence of an ongoing review of its internal governance and controls”.
The company was last year hit with a £5m fine by the competition watchdog after Cowgill was filmed talking to Footasylum’s boss in a car park despite the pair being told to stay separate while the regulator investigated JD’S takeover of Footasylum.
Earlier this month JD Sports was also accused of fixing the price of Rangers FC shirts in “cartel activity” with Elite Sports.
Cowgill led the retailer for almost two decades and oversaw a surge in its value, taking it into the FTSE 100.
Helen Ashton, a former Asos executive, took over as interim chair while JD executive Kath Smith is now acting chief executive. The pair would not disclose how much the company had spent on recent investigations.
Ms Ashton said that while she does not want to “tie the business down with a load of bureaucracy” it is important that changes are made to ensure no further missteps occur.
She hinted at deeper changes at the business, adding: “You can’t just go out and hire 50 compliance people and think that will fix things.”
Despite its recent troubles, the retailer reported record pre-tax profits of £654.7m for the year to January, with Ms Smith saying the company has been unaffected by the cost of living crisis as young people continue to spend on trainers.
“We aren’t seeing any changes in the purchase habits of our consumers,” she said.
The company told investors it has a number of “high calibre candidates” interested in the chief executive job.