Consumer

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Wanted: Chairman to get seller of cheap sportswear running in the right direction. Must be able to tame dominant founder, buck up or kick out the chief executive and charm detractors, from City fund managers to unions.

This is unlikely to be the advertisement for a new chairman of Sports Direct. But it should be.

Big institutional investors including Royal London Asset Management and Legal & General have said they'll vote against current chairman Keith Hellawell at Sports Direct's annual meeting Wednesday. They certainly have reason to want a replacement, given the bad press on the company's Victorian working conditions and loose approach to corporate governance.

Mike Ashley, founder and executive deputy chairman, holds 55 percent of the shares, and so has the final say on new appointments. Gadfly imagines the ad that headhunters might circulate:

The Company

Sports Direct, which started as a single shop in 1982, has floundered as it expanded, and failed to keep investors on board. Shortly after its initial share sale in 2007, Ashley described institutional investors complaining about early poor performance as a "bunch of cry babies." With appointments of family to key roles, a string of profit warnings and Parliamentary scrutiny of working practices, shares have fallen, so it looks like things haven't improved much since.

The Role

The new chairman must juggle Ashley's dominance against demands for reform. When shares were riding high -- they peaked above 900 pence just in 2014 -- investors tolerated his foibles. Now that the stock is a lot closer to the 300 pence initial price, they want to see Sports Direct run like a conventional company and not a private fiefdom. That's where you come in.

Rollercoaster Ride
Shares in Sports Direct have slumped after profit warnings and problems with working practices
Source: Bloomberg

Skills/Experience

Diplomatic skill is key -- irking the founder would be a disastrous strategy. Ashley's been working hard all summer on addressing the many problems so he should meet you halfway. 

The successful candidate will have to keep his or her ego in check while hitting the ground running, as a new chief executive may be needed straight away. Dave Forsey, who started as an assistant in Ashley's first shop, was heavily criticized in a report published Tuesday on the findings of RPC, the lawyers investigating Sports Direct's working practices. The company's failings meant he wasn't paid his 3.6 million pound ($4.8 million) bonus this year. (N.B. in preparation, you might want to catch the new season of The Real Housewives of Cheshire, whose cast includes his wife, Stacey).

Leaving that aside, securing a permanent finance director, and refreshing the company's board and roster of non-executive directors are also high priorities.

Sports Direct has agreed to assess corporate governance over the next 12 months and will present its findings to shareholders next year. The new chairman will have to manage that process, and indeed, make sure it actually happens.

Political Savvy

Lawmakers slammed Sports Direct's Shirebrook warehouse, which included policies against staff getting a drink of water outside set break times. The RPC review has recommended offering some workers on zero hours contracts a permanent role, ending a controversial six strikes disciplinary policy and improving welfare facilities for warehouse staff.

The new chairman will have to see these changes through, all while keeping an eye on costs, given that the environment for consumers' discretionary clothing purchases is getting tougher after Brexit.

Sports Direct Stalls
Growth in underlying earnings came to an end in fiscal year 2016
Source: Bloomberg

Merger and Acquisition Credibility

Ashley may well want to cut down on all this external scrutiny by taking the company private. That shouldn't be too much of a stretch -- the company has a market capitalization of about 2 billion pounds and little debt, while his stake is worth about 1.1 billion pounds. If Ashley takes this route, the new chairman must ensure minority shareholders are treated fairly.

Note to applicants: This is a winner-takes-all role. Succeed in rehabilitating Sports Direct, and you'll win the respect and admiration of everyone from warehouse workers to senior Members of Parliament. Mess it up, and you'll be relegated to the corporate wilderness.

Good luck! 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at afelsted@bloomberg.net

To contact the editor responsible for this story:
Jennifer Ryan at jryan13@bloomberg.net