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Investors stand by Hellawell but patience is wearing thin

‘So darling, darling stand by me,” sang Ben E King’s soul classic as Sports Direct’s chairman Keith Hellawell was about to plead the same of investors at the company’s annual meeting in Shirebrook, Derbyshire.
The choice of song, part of a playlist of upbeat Motown classics designed to lighten the tense atmosphere, was unwittingly fitting as Hellawell today once again faced a revolt from Sports Direct’s independent investors. While questions about his survival once again hung like a black cloud over the sparsely attended meeting, there were few similarities with last year’s high-octane event. Last year Mike Ashley, Sports Direct’s founder, donned a high-vis vest to take press and investors on a tour of the vast Shirebrook warehouse.
The “open day” event had been part of an attempt to rehabilitate Sports Direct’s reputation and boost transparency in the wake of corporate governance criticism and scandals about its treatment of the workforce. However, those efforts were blown off course when Ashley pulled a wad of ?50 notes out during a mock security search. This year Ashley decided his time was spent better doing other things and declined to attend the meeting, despite his role as chief executive. Since last year’s meeting Sports Direct’s board has been reshuffled following three resignations, including that of long serving boss Dave Forsey, with new hires including its first permanent finance boss for three years.
Investors stand by Hellawell but patience is wearing thin

Mike Ashley produces wad of ?50 notes at Sports Direct security
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But despite the boardroom changes and the company’s series of pledges to improve conditions for workers, all of the questions from shareholders focused on what Sports Direct was doing to reduce zero-hour contracts and improve its reputation as an employer since last year’s scandals.
Richard Greening, a representative of the London Borough of Islington Pension Fund, commented: “You have said you have done various things about fixing conditions for workers, but the negative effects of the revelations have not been corrected as far as the market is concerned.”
A Unite representative added: “It is unclear how employees on zero hours can be inspired, stimulated, motivated and empowered as Sports Direct says its staff can be in its annual report.”
Hellawell said that he was “sick and tired of reports” that suggested the company didn’t provide sick or holiday pay and trumpeted Sports Direct’s status as a significant UK employer and taxpayer.
He reasoned the retailer was not shifting more zero-hour staff to permanent contracts because workers preferred the flexibility. Hellawell said that as long as zero-hours contracts remained a legal form of employment, the company would consider them.
Worker representative Alex Balacki, who joined Sports Direct’s board in April, making the company one of the first to introduce employee representatives, said that his tour of shops revealed that the majority of workers preferred zero-hours deals.
However, the vast majority of workers at Shirebrook’s warehouse, which is staffed by agencies, do not have the ability to feed into Balacki’s surveys.
The negative effects of the revelations have not been corrected as far as the market is concernedRichard Greening, a representative of the London Borough of Islington Pension Fund
A Sports Direct spokesman said there was a separate “listening group” for Shirebrook workers, although unions have claimed that those surveys breach staff anonymity.
Hellawell said that Sports Direct wanted to “foster good relations [with the trade unions]”, but “we don’t think that’s always reciprocated”.
Sports Direct’s under-fire chairman said at the meeting that he believed there was no need for an “outside body” to review working conditions at the retailer.
“I have been in the public life for 40 years and in business for 20 years… I look always at the outcome of what’s being done, rather than who is doing it,” he said.
Sports Direct promised shareholders last year that it would hire an independent chairman to steer a review of corporate governance. However, after failing to find a suitable candidate the retailer is using law firm RPC, which it has an existing relationship with.
Investors stand by Hellawell but patience is wearing thin

Sports Direct is optimistic of growing underlying earnings by between 5pc and 15pc next year
The chairman revealed that the ongoing review of corporate governance had listed five concerns and the business had addressed one of them, but he failed to elaborate on what those concerns were or how they had addressed the problem so far.
Prior to the meeting, Sports Direct attempted to soothe the City by revealing that it has an optimistic outlook for its “Selfridges of sport” strategy.
Ashley is attempting to revive sales by opening a number of “flagship” shops which stock more premium ranges of sports brands, in a significant shift from the “pile it high, sell it cheap” strategy that made him a billionaire.
Sports Direct said that its “new generation” of stores were exceeding expectations and the retailer was optimistic of growing underlying earnings by between 5pc and 15pc next year.
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