Earlier today, Sports Direct announced that Mike Ashley, the Chief Executive Officer of the firm, is planning to step down from his current role and the board of the retailer to concentrate on running Debenhams in an attempt to turn around the struggling British department store group.
Sports Direct owns a near 30 percent stake in Debenhams. It said that it was calling for a general meeting of the shareholders of Debenhams to remove all but one of the existing board members and appoint Ashley to an executive position.
Ashley would then forego his position as the chief executive of Sports Direct, the discount sports goods and clothing powerhouse that he founded in 1982, He has built it into one of most recognisable retail names in the United Kingdom.
In an e-mailed statement, Debenhams said that it was “disappointed” that Sports Direct made the move to call for some changes to its board. It added that its board has been engaging with Sports Direct and its other stakeholders.
Sports Direct added that if the plan of Sports Direct goes through, the current deputy chief financial officer of the company, Chris Wootton, would step up to take the position of acting chief executive.
The mid-cap company stated: “If Mr Ashley were to be appointed to the board of directors of Debenhams during this business-critical period for Debenhams, Mr Ashley would carry out an executive role, and would focus on the Debenhams business.”
The news were released days after Debenhams released a warning on profit again, as it edged nearer to a restructuring. Debenhams traces its history back to 1778 and has recently had a hard time to keep pace with consumers moving online and to cheaper rivals.
Last month, Debenhams was able to secure 40 million pounds in additional funding from some of its lenders. Last Thursday, it said that it remained focused on the restructuring of its balance sheet and that the negotiations were well advanced.
Similar to the rest of the world, shoppers in the United Kingdom are shifting towards online shopping. Therefore, it is hurting traditional retailers as subdued consumer spending and increasign costs also take their toll.
The desire of Ashley to take control of the struggling department store chain comes after the vote of Sports Direct against the re-election of Sergio Bucher, the Chief Executive Officer of Debenhams, and Ian Cheshire, the former Chairman, at the annual general meeting that was held last January.
The shares of Debenhams pummeted by 85 percent in 2018.
Over the last two years, Ashley has taken a series of dominant stakes in some of the struggling high street chains of the United Kingdom.
Last year, Sports Direct acquired House of Fraser, a department store chain, out of administration and analysts have since speculated that he might be planning to put the two department store groups together.