Sports Direct Ends Four-Year CFO Wait as Ashley Plugs Key GapBy
Jon Kempster will be company’s first permanent CFO since 2013
Shares jump as retailer predicts unexpected profit rebound
Mike Ashley’s Sports Direct International Plc appointed Jon Kempster as chief financial officer, filling the key role with a permanent member of staff for the first time since 2013.
Kempster, who has held CFO positions at a range of small and mid-sized U.K. companies, will join in September, Sports Direct said Thursday as it forecast an unexpected rebound in profit for the coming year.
The appointment marks an important step for the retailer as it seeks to restore faith among investors following a series of corporate-governance lapses that led independent shareholders to oppose Keith Hellawell’s re-election as chairman at the last annual meeting. Sports Direct shares rose as much as 6.5 percent in early London trading.
“It’s good that they have managed to get a CFO in place,” Numis analyst Andy Wade said by phone. “Not having one was unhelpful to the overall perception of the company and added to broader concerns over their corporate governance.”
The Sports Direct role is the biggest yet for Kempster, who most recently was CFO of cost-management consultant Utilitywise Plc. Prior to taking that position in 2014, he served as finance director of companies including logistics provider Wincanton Plc and U.K. manufacturing group Delta Plc.
The appointment is a boon for Ashley, who has struggled to attract a suitable candidate against a backdrop of concern over corporate governance and working practices. Sports Direct’s last permanent CFO was Bob Mellors, who retired in December 2013. Matt Pearson, formerly a member of Mellors’ team, filled the role on a temporary basis for three years before quitting to take another job in December.
Ashley, Sports Direct’s founder and majority owner, has said he’s seeking to re-position the company as the “Selfridges of sports retail,” comparing it with one of London’s most illustrious department stores. As part of that effort, he’s invested more than 300 million pounds ($390 million) in securing newer, larger stores over the last year. Those outlets are generating profit that’s at least double that of an average Sports Direct U.K. store, which are known for their no-frills, low-price approach.
Sports Direct said Thursday it aims to grow earnings before interest, tax, depreciation and amortization by between 5 percent and 15 percent in its current financial year, above analyst estimates for a decline of 3 percent.
“It is hard to be anything but impressed by management’s upbeat stance,” Jonathan Pritchard, an analyst at Peel Hunt, said by email. “We have yet to hear such an upbeat outlook statement from any of the retailers so far this year.”
Sports Direct reported a 29 percent drop in full-year earnings after being caught out by the Brexit-induced drop in sterling. Earnings before interest, tax, depreciation and amortization fell to 272.5 million pounds in the 53 weeks ended April 30. That did, however, beat analyst estimates for a drop of 31 percent.