Sports Direct is an extraordinary company. In three decades it has shot from nothing to the largest sports retailer in the UK. It owns the grand Piccadilly store Lillywhites and the boxing-kit manufacturer Lonsdale, and has made its founder, Mike Ashley, a billionaire. It has also become a byword for a kind of discount shopping: pile ’em high, sell ’em cheap, and don’t fret about making the experience too pleasant for the bargain-hunters – even if that means leaving the tills and shopfloors sparsely staffed.
That’s the side of the story Sports Direct would like you to hear, but the business is extraordinary in other ways too – as will be confirmed in its annual shareholder meeting on Wednesday morning. The company doesn’t just treat customers badly; staff are handled with contempt too. By its own admission, around 80% of its employees are on zero-hours contracts, meaning that they have no guarantee of work or pay. The Unite trade union reckons Sports Direct accounts for one in five of all such zero-hours contracts in British retail. An investigation for Channel 4 last year found warehouse staff were subject to harsh punishment just for “excessive chatting” or long toilet breaks – while those at the Shirebrook headquarters deemed not to be working hard enough would be named over the depot tannoy. A Scottish parliamentary inquiry just a few months ago found that 200 workers at the company’s Ayrshire warehouse had been sacked with only 15 minutes’ notice.
Here, in all its closely watched, readily punished, power-stripped ignominy, is some of the worst of contemporary work. Or, as MPs on the Scottish affairs committee put it this spring, the company acts like a “backstreet outfit”, bilking suppliers of pay and “shafting” its own workers. Meanwhile, the company’s chief executive, Dave Forsey, is in line for an award of 1m shares – worth almost £8m at today’s prices – even while targets on the company’s bonus scheme are being hastily watered down.
Victorian conditions at the bottom, easy millions for the top: Sports Direct embodies big British capitalism at its grubbiest. And, as will be confirmed at Wednesday’s shareholder meeting, it also flouts some of the most basic rules for how a company should be run. Take the chairman, Keith Hellawell, who has admitted to not knowing about key decisions at the firm, such as the collapse of a subsidiary business, until the very last minute. Or Mr Ashley, now the executive deputy chairman, who has failed to attend four board meetings. It may be in the FTSE 100, but the company behaves more like a cash-yielding plaything that pays out big to a select handful. No wonder the Trade Union Share Owners group, the Institute of Directors, the Investment Association and a number of other campaign and shareholder-advisory groups are all up in arms about the conduct of the senior management. Yet any shareholders’ revolt will almost certainly fail for as long as Mr Ashley holds on to his majority stake in the company. Given the parlous levels of corporate governance, there is a very good case for the company’s auditor, Grant Thornton, and its brokers, who include Goldman Sachs and Citigroup, stepping down. But the case of Sports Direct shows up a wider failing of British society to demand more from its companies, while subsidising their poverty pay. Until a genuine living wage and decent terms for staff become the norm from our high-street businesses, UK plc has a lot further to go.
