Sports Direct share price: Mike Ashley admits to failings at retailer

Sports Direct’s (LON:SPD) majority owner Mike Ashley has admitted that his company is under investigation by HM Revenue and Customs after some staff were paid less than the minimum wage. Ashley made the admission as he appeared in front of MPs investigating the retailer’s treatment of its workers.

Sports Direct’s share price rallied in yesterday’s session, adding 5.39 percent to close at 383.20p. The shares have lost over 40 percent of their value over the past year.
Mike Ashley, who faced the Business, Innovation and Skills Committee yesterday after being threatened with being held in contempt of Parliament, acknowledged that workers in Sports Direct’s Derbyshire warehouse went unpaid for time spent undergoing security searches. The hearing came after the retailer’s practices came under parliamentary scrutiny following an investigation by the Guardian last year which claimed that thousands of workers at the mid-cap group were effectively being paid below the minimum wage.

“Some things have come as a bit of an unpleasant surprise,” Reuters quoted Ashley as saying of his review, admitting that security bottlenecks at the warehouse in Shirebrook had led to workers effectively earning below the legal minimum. “I have discovered some issues and hopefully I’ve addressed some of those issues.”
The breach, however, has been made the subject of an investigation by Revenue & Customs. The Financial Times quoted Steve Turner, assistant general secretary of Unite the Union, as disclosing that the FTSE 250 retailer had agreed with HMRC to give some backdated compensation to warehouse employees — but not its thousands of temporary workers.
The Guardian meanwhile quoted experts as saying that the minimum wage admission now raised the prospect of hefty fines for the company.
Piers Hillier, chief investment officer at Royal London Asset Management, told the FT that Ashley had failed to address “significant corporate governance failings” in the management of Sports Direct.
“Mr Ashley frequently suggested at the hearing today that he has no oversight or knowledge of large parts of the company’s business,” he pointed out, adding that this was “extremely concerning for investors”.
As of 08:07 BST, Wednesday, 08 June, Sports Direct International Plc share price is 383.20p.