Business

Mike Ashley insists 'elevation' on track but new auditor remains a mystery

Sports Direct founder Mike Ashley

MIKE Ashley has insisted his "elevation" strategy to change Sports Direct from a discount retailer to the Selfridges of sport is still on track - although it might take longer than first thought.

He made the comments to shareholders at the retailer's annual general meeting in central London, heaping praise on Michael Murray, head of elevation and Mr Ashley's soon-to-be son-in-law.

The retail tycoon also said House of Fraser remains an ongoing challenge but one he was willing to face.

He ruled out calls for an independent review into corporate governance, revealed he "begged" Debenhams to stop paying a dividend and explained he wanted a Big Four auditor for the business as a "tick box" exercise to prove his critics wrong.

Wearing a blue checked blazer, black trousers, white shirt and blue tie, Mr Ashley sat quietly through the formal part of the meeting, which was conducted by chairman David Daly, a former Nike executive.

There was no update on the £605 million VAT bill being demanded by Belgian authorities, which Sports Direct is challenging and caused delays to results being published earlier this year.

Shareholders were also left in the dark over who will audit the business, after Grant Thornton quit.

Business Secretary Andrea Leadsom is now expected to appoint one on Sports Direct's behalf after PwC, Deloitte, KPMG and EY all ruled themselves out.

Voting took place, with all resolutions passing, including Mr Ashley being re-elected as chief executive.

However, nearly a third of independent investors voted against the re-election of Mr Ashley, who controls 62 per cent of the firm, following a difficult year.

Following the vote, the businessman agreed to a request to answer questions on broader topics. The most contentious issue remains the company's lack of auditor.

Having previously suggested the need for a Big Four auditor was due to Sports Direct's size, Mr Ashley said the decision to appoint one was a "personal one".

When asked why he was "obsessed" with a Big Four auditor, he explained: "If you don't have a Big Four, people will always say, 'There must be a reason'. That's the criticism I get levelled at me."

Sports Direct remains under pressure as it attempts to grapple with integrating House of Fraser into the business, along with several acquisitions and bids being made throughout the high street and beyond.

But Mr Ashley said he has full faith in Mr Murray and the elevation strategy of improving stores, whilst rolling out luxury fashion label retail brand Flannels.

He said: "It is the success of SD going forward is the elevation strategy. I tend to not focus on much else other than that."

Other questions from the 40-odd shareholders in attendance included when he would introduce a dividend.

But Mr Ashley pointed out that HBOS and Debenhams had a dividend, but both subsequently went bust.

Another asked whether he would consider holding an independent review into corporate governance, but was slapped down with the reply: "100% absolutely not."

Mr Ashley also spoke at length about the need for business rates to be overhauled, saying he would be happy to meet with MP Frank Field, who has questioned the businessman previously in Parliament.

After the meeting Mr Ashley mingled with shareholders before being led away by his advisers.

Before the start there had been protests by Newcastle United Football Club supporters, angry at the tycoon's stewardship of the club, which he owns.

A heavy police and security presence was also in place, with security guards escorting shareholders to and from the meeting, where tea and coffee was served.

Outside the offices, the media gathered after Sports Direct decided that journalists would not be allowed to observe the meeting - in contrast to the vast majority of other retailers who allow guests to attend.

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