Mike Ashley underlines plan for House of Fraser as 'Harrods of the high street'
Uncertainty still hangs over the future of Shrewsbury's House of Fraser store a month after the firm's £90 million takeover by tracksuit tycoon Mike Ashley and his Sports Direct empire.
House of Fraser went bust with debts of nearly £1 billion and was bought out of administration by Mr Ashley with promises to create "the Harrods of the high street".
Despite threats to close stores because of clashes with 'greedy' landlords, since the takeover Mr Ashley's team has only confirmed that seven of its 59 stores will stay open, including Telford.
But there has been no word on the others, including the branches in Shrewsbury and Birmingham, and Beatties in Wolverhampton.
Today the Sports Direct chief executive repeated his plan, saying: "Our strategy to transform House of Fraser into the Harrods of the High Street will be a game changer."
It came in a brief statement before the Sports Direct annual shareholder's meeting in London, alongside a trading update that the chain expects to achieve an improvement in earnings of between five and 15 per cent, excluding the acquisition of House of Fraser.
Meanwhile Wolverhampton Council has confirmed it is continuing its own talks with the landlords who own the Beatties site in the city centre. Council managing director Tim Johnson said the preferred option was for it to remain a House of Fraser store, but the local authority had been discussing alternative options with the landlords.
"It would be difficult subdividing a building like that," he said, "but we are absolutely determined to secure a positive future for that site, whatever that may be. It is important that a building as iconic as that should not be left standing empty – that is not an option."
Meanwhile Sports Direct faces the prospect of an embarrassing shareholder revolt today with investors set to admonish the firm over corporate governance failures. At the same time the company has announced that its chairman Keith Hellawell will retire at the end of today's AGM meeting.
Instead the company chairman, former top cop and 'drugs czar' Keith Hellawell will be facing the music.
Advisory groups ISS and Pensions & Investment Research Consultants (Pirc) had previosuly recommended voting against the re-election of Mr Hellawell because he has lost shareholder confidence and has failed to appoint any women directors to the board.
Mr Hellawell, a former senior police officer and onetime 'drugs czar', is facing the music on his own today as the board has cleared Mr Ashley not to attend "due to overriding demands for his time".
This refers to his work on House of Fraser, which has seen him visiting many of the stores in person as he negotiates with landlords to try and save around 80 per cent of the 59 stores.
Two influential advisory groups have recommended that shareholders in the retailer vote against the billionaire’s re-election as chief executive at the company’s AGM.
Sports Direct’s founder and chief executive stands accused of a string of questionable practices, including handing millions to his daughter’s boyfriend for his role as a property consultant.
Mr Ashley sparked controversy after he paid £5 million to MM Prop Consultancy Limited, a company owned by Michael Murray, boyfriend of Anna Ashley.
Investors have been warned about Mr Ashley’s power over the company because he is the Sports Direct’s majority shareholder, and owns 61 per cent of the group.
As such, he does not face any real prospect of being voted out, but independent investors will have a chance to express their anger over the way the firm is run.
In a note to shareholders before today's meeting, Pirc said: “His position on the board and level of shareholding raises significant concerns about his influence on the board and whether the other directors can objectively challenge and influence the board’s decision-making process.”
ISS said investors should not support the re-election of both Mr Ashley and Mr Hellawell due to the firm’s “apparent unwillingness to fully address the concerns of independent shareholders”.
“These concerns are exacerbated this year by the appointment of Michael Murray - domestic partner of Mike Ashley’s daughter - to a key management role alongside a proposed £5 million payment for his property consultancy work,” ISS said.
Mr Murray has been charged with leading the overhaul of Sports Direct’s property portfolio, part of Mr Ashley’s plan to make the company the “Selfridges of sport”.
In addition, Mr Murray has been made Sports Direct’s “head of elevation”, and has been tasked with building the company’s relationships with high-end brands such as Nike, Adidas and Puma.
Sports Direct’s leadership is also still haunted by the findings of a parliamentary investigation into the working practices at its warehouse in Shirebrook, Derbyshire, which concluded that the site was run like a “Victorian workhouse”.
The sportswear group now has a member of staff who attends board meetings to represent workers; however, Pirc described Sports Direct’s actions so far as “insufficient”.
“There is still no board-level committee established for employment concerns, and there is no individual responsible on the board for human resources issues,” Pirc said.
Shareholders may also be offering their views on the company's decision to buy House of Fraser. Sports Direct already owns nearly 30 per cent of Debenhams and has seen the value of its stake plummet this year as Debenhams' share price has fallen by 60 per cent since the start of January.