Opinion: Has Mike Ashley made a meal of his masterplan?

The sports retailer dismayed analysts as it revealed that its highly anticipated preliminary results, originally scheduled for July 18, would now be withheld until as late as August 23.

The retailer, whose share price fell 9% and at one time hit a low of 220.2p, not seen since early 2012, on the news, said the 11th-hour hold-up was down to complexities integrating the House of Fraser department store business and “current uncertainty as to the future trading performance of this business”, as well as increased scrutiny of its auditors Grant Thornton by the Financial Reporting Council.

Arguably more alarming, however, was the warning from Sports Direct that the eventual completion of “a number of key areas” of its accounts and audit “could materially affect” the guidance given at the interim mark last December.

At that time Sports Direct said it expected full-year EBITDA, excluding House of Fraser, to rise between 5% and 15%.

The possible degradation of performance at the core division of Sports Direct raises tough questions about how Mike Ashley has led the business since he last updated the market.

In that time Ashley has ousted Debenhams’ former top brass from the board, labelled the retailer’s pre-pack administration a ‘national scandal’, demanded its remaining senior executives take a lie detector test and launched a legal challenge against its CVA.

He has also called for a boardroom cull at Goals Soccer Centres, another investment, tried and failed to snap up home shopping group Findel and most recently acquired struggling entertainment specialist Game.

Distractions

All of that would be easier to see as the actions of an ardent and acquisitive retail executive and stakeholder when the performance of his own core business was strong. When that may not be the case, as yesterday’s update indicated, it is harder to justify as much more than a distraction from more pressing jobs at hand.

Questions about the performance of Sports Direct become all the more significant when taken alongside Ashley’s loss of Sports Direct’s long-serving head of retail Karen Byers, whom he once described as the person who “runs Sports Direct” and who exited suddenly this month after a 28-year stint at the retailer.

“The lack of clarity about the core business has seriously spooked the City”

Ashley has described trading in November last year as “unbelievably bad”, and, with the worst June on record having just passed, the market looks no less challenging for any retail boss today – never mind one who has multiple businesses spanning a range of markets to juggle and has just lost a key ally.

Sports Direct has embarked on a mission to establish itself as ‘the Selfridges of sport’ in recent years, driven by an elevated in-store proposition and bricks-and-mortar portfolio.

Ashley is also mulling the launch of a more upmarket Frasers fascia to reinvigorate House of Fraser’s performance across a group of cherry-picked stores, while the group’s existing luxury fascia Flannels goes from strength to strength.

Losing control?

However, whatever progress has been made has not been given anything close to the airtime that Ashley’s ongoing battle with Debenhams has, and the lack of clarity about the core business has seriously spooked the City.

There is no denying that Ashley is a canny operator. Nevertheless, his bandwidth across the business will undoubtedly have been stretched, and it appears that this is beginning to erode Sports Direct’s bottom line.

Ashley has always been a law unto himself, and his unique perspective on retail has delivered results in previous years. But the postponement of full-year results for between one and five weeks, and the abrupt warning that profitability may come in below previous guidance, does not give the impression of a man in firm control of a rapidly expanding retail empire.

In 2016, Ashley said of running Sports Direct: “One minute [I] had a tiny little inflatable and you’re in control and the next minute you are on an oil tanker.”

The decision to postpone the results will be a disappointment to those who thought Ashley had become more adept at steering the ship. What’s not clear is whether it is the HMS Endeavour or the Titanic.