Yesterday David Richardson, the chairman of Sports Direct, the UK's biggest sportswear retailer, decided to quit his position, after a serious quarrel with Mike Ashley.
It was only three months ago, that he had been invited to the company to help Mr. Ashley to establish new relationships with the market and the City.
The company stated that the chairman believed that he had been unable to establish a strong working relationship with the executive team and, as a result, believed that it would have been in the best interests of the company and the board that he stepped aside.
There are doubts that Mr. Richardson had difficult relationship with Mike Ashley and Dave Forsey. The latter was Mr. Richardson's chief executive, from the very time he had agreed to become the chairman of Sports Direct.
David Richardson announced about his decision to leave his position on Wednesday, when he understood that the company will not keep his promise about hiring financial advisers by the end of May.
Many critiques think that the reason of Mr. Richardson's quit was his disappointment with the communication quality of the management with the City.
Mr. Richardson didn't give any comment concerning his quit, but he said that it was unfortunate that they had got to the point that he felt it had been necessary to resign. He also said that he genuinely wished the company well and hoped with the appointment of advisers they would build a good relationship with the City.
Sports Direct had no official financial advisers or investors relations team, as they have dismissed Tulchan Communications, the financial public relations firm, after the flotation of Sports Direct shares occurred. The company representatives announced that the company management had appointed Related Links to care about investor relations and Financial Dynamics for public relations.
Mike Ashley, the founder of the Sports Direct, who built it from a single shop, now owns 57% of Sports Direct shares, which he will not be able to sell until 2009. Officially he is also the executive deputy chairman of the company, which enables him to have control, without interacting with the investors.
Today Sports Direct has 465 shops and brands and now one of its purposes is to develop the relationship with all its stakeholders.
Sports Directs representatives added that Simon Bentley, the former executive of Blacks Leisure and director of the five-a-side football centre operator Powerleague, agreed to become acting chairman. Sports Direct owns 29% stake in Blacks Leisure - which owns Blacks, Millets and sportswear company O'Neill. Sports Direct announced yesterday that they wanted to hire one new non-executive director as well.
Chief executive Dave Forsey said that they would like to welcome their new set of advisers and, with their help, looked forward to strengthened relations with the City and our shareholders.
However the City yesterday was disappointed with the business. Shares in Sports Direct got down to 205p. Although the shares of the company have never rated above the 300p at which they were floated, notwithstanding investors' positive estimates at that time.
According to Richard Ratner, analyst at Seymour Pierce, there's nothing wrong with the company, but management's credibility is shot through. He also added that despite the appointments, this was the proverbial straw that breaks the proverbial camel's back, which they were afraid of. He also thinks that whilst they feel the company is perfectly sound, the issues of the last three months make it very difficult for them to continue at that time with a positive recommendation.
Mike Ashley was at St James' Park yesterday to talk with the board about his latest interest, Newcastle United. Then he visited Freddy Shepherd who runs the club and is in hospital with pneumonia.
Although Newcastle fans have reacted positively to the businessman who was talking about the prospects for their team, however he should be ready to meet negative reaction in the City of London, which will be the result of his chairman, David Richardson, quit. - Alla Harutyunyan for HULIQ.COM
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