City ramps up action against the ‘abysmal’ Sports Direct

SPORTS Direct will face renewed pressure at its annual meeting this week over zero-hours contracts and the future of its chairman, after an alliance of investment funds added its voice to a volley of criticism.

ShareAction, which represents 15 funds that control £50billion of stock market assets, plans to challenge the Sports Direct board over staff working conditions, low pay and the effectiveness of chairman Keith Hellawell.

Hellawell faced MPs earlier this year to answer questions about the collapse of Sports Direct’s fashion subsidiary USC and working conditions at the chain.

During the parliamentary session in March, Hellawell admitted that about 80 per cent of Sports Direct staff worked on zero-hours contracts, which do not guarantee work, pay or benefits.

He also raised concerns in the City when he admitted that he had not been informed about decisions relating to the collapse of USC until the last minute.

Catherine Howarth, chief executive of ShareAction, said: ‘The abysmal working practices at Sports Direct make it a problem within the FTSE 100. Such standards at a publicly listed firm bring the entire listing process into disrepute.’

She was particularly concerned about an apparent ‘six strikes and you’re out of the door’ policy that applied to ‘sickness, talking and visiting the toilet too frequently’.

She said: ‘This inhuman treatment translates into a financial and reputational risk for investors in Sports Direct. We encourage shareholders to firmly challenge the board at this week’s AGM.’

Shareholder advisory body Pirc has also raised concerns that include failure ‘to adequately

discuss human rights issues’ and the re-election of Hellawell, which it opposes.

The Trade Union Share Owners group has written to the company’s top 20 investors urging them to oust Hellawell.

One Conservative MP said during the parliamentary questioning of Hellawell that he had been ‘put up as a sacrifice’ in boss Mike Ashley’s place. The Institute of Directors described the Sports Direct board as ‘dysfunctional’.

A report from stockbroker Peel Hunt, issued late last week, said it expected same-store sales and profit to begin to slow, setting a target for the shares of 720p. The stock ended last week at 797p.

Meanwhile, Ashley may go head to head with coffee chains Starbucks and Costa with plans to launch a new venture under the name Coffee Club. It will initially be seen only in Sports Direct Fitness gyms.

The firm appears to have registered the website CoffeeClub.com, leading to speculation that it may have bigger plans for the concept.