Sports Direct in disarray

Chairman quits just minutes before AGM Director says board mulled Debenhams bid Then Ashley denies he’s planning takeover

SportS Direct was in disarray last night as a drastic overhaul of the company’s board was overshadowed by an apparent U-turn on a plan to buy Debenhams.

Just moments before yesterday’s annual general meeting, founder and chief executive Mike Ashley announced the resignation of his close ally Keith Hellawell, who has been the firm’s chairman for almost a decade.

Simon Bentley, the senior independent director, also stepped down, while William Hill executive Nicola Frampton was appointed as Sports Direct’s first female board member.

the shake-up was enough to prevent a major shareholder rebellion at the AGM in London, although nearly 10pc opposed Ashley’s reappointment as a director. the 54-year-old had to deny that Sports Direct was considering a takeover of Debenhams, having bought House of Fraser for £90m. It owns 29.7pc of Debenhams and speculation has been rife that it will bid for the entire company.

Bentley, 62, said merging House of Fraser and Debenhams had ‘been discussed’ by the board but he later backtracked. ‘If any of you had the job of handling House of Fraser right now, I think you might have your hands full, and incidentally we’ve also got Sports Direct,’ he said.

Later, Sports Direct issued a formal statement, saying ‘it does not intend to make an offer’ for Debenhams. the chaos is the latest headache for Ashley and Sports Direct investors.

Analysts have been largely cynical about Ashley’s bid to make House of Fraser the ‘Harrods of the High Street’. It acquired the retailer in a controversial prepack administration deal meaning it is not obliged to honour any of its debts to suppliers who are owed hundreds of millions.

However, analysts at investment bank Liberum said the acquisition of House of Fraser could prove a shrewd move.

Hellawell, 76, is thought to have stepped down to avoid an investor revolt after Glass Lewis urged shareholders to vote against his and Ashley’s reappointment.

A former police chief constable and government drugs tsar, Hellawell has faced criticism over his leadership style, and last year narrowly survived a re-election vote. He came under fire in 2016 over working practices at Sports Direct’s warehouse in Derbyshire, described as ‘Victorian’.

Current director David Daly has been named as new chairman.

Ashley Hamilton Claxton, at royal London Asset Management, said: ‘We hope that putting in place strong governance controls will be the top priority.

‘this includes improving the working relationship with independent shareholders and addressing concerns about working conditions and contracts.’