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

Time for Change. That's the title of Sports Direct's presentation to investors Wednesday. But the sportswear retailer is not changing enough.

A day after founder and majority shareholder Mike Ashley promised better conditions for employees and to assess the group's woeful corporate governance, he publicly backed chairman Keith Hellawell.

Hellawell, who's held the top role since 2009, offered his resignation over the weekend after some shareholders called on him to step down. But the board -- which is really controlled by Executive Deputy Chairman Ashley and his 55 percent stake -- asked him to stay on.

Mike Ashley has clung to his majority stake in Sports Direct, giving him the final say on changes
Source: Bloomberg
Note: figures aggregrate holdings from multiple portfolios overseen by the same manager

Investors aren't having that. And at Sports Direct's annual meeting on Wednesday, 53 percent of votes cast by independent shareholders were against the re-election of Hellawell. Sports Direct says it will hold a second vote within the next 90-120 days. 

The company's not just playing nice. According to Financial Conduct Authority rules aimed at protecting minority shareholders,   another vote is required when a majority of them fail to support the reappointment of a non-executive director.

Ashley's stake still gives him the final say, since the second ballot will be decided by simple majority. But the acrimonious mess created by Wednesday's result heaps pressure on him to pay more attention to his investors. Legal & General has already called for Hellawell to step down immediately.

The problem for minority investors in Sports Direct is that the founder does not like to be bullied. As Gadfly has argued, a new chairman is needed to stand up to Ashley while cajoling him into making the necessary changes, an avoiding a fatal bust-up at the same time. 

But refreshing the board may not come soon enough to arrest the decline in Sports Direct shares, which fell as much as 11 percent on Wednesday.

Poor Performance
Executive turmoil and a disappoiting profit forecast ahead of the Sept. 7 AGM has hit Sports Direct shares
Source: Bloomberg
Intraday times are displayed in ET.

The slump followed the company's warning that underlying earnings before interest, tax, depreciation and amortization would be about 300 million pounds ($401 million) this year, down from 381.4 million pounds in the year to April 2016.

The statement wasn't all bad news for investors. The company will also invest heavily to improve stores, something that's badly needed to encourage Adidas and Nike to supply it with their best sneakers. At about 300 million pounds a year this won't come cheap, but it's money well spent.

Still, it's hard to see shareholders being satisfied with limiting the alterations to just the store base, second vote or not. With the stock well below the peak 925 pence price in 2014, they'll keep their eyes trained on the board. Dave Forsey, who was heavily criticized in the report published Tuesday into working conditions, wasn't in the firing line at the meeting, but is still vulnerable.

As Wednesday's shareholder vote showed, change may be coming sooner than Ashley thinks.

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

(Updates to include results of AGM in fourth-sixth paragraphs.)

  1. See this FCA document, sections 2.15 and 2.16 on Independent Directors

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Andrea Felsted in London at

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Jennifer Ryan at