Sports Direct comes under fire while JD Sports emphasises resilience
Chief executive Mike Ashley backtracks from shutdown refusal
The chief executive of Sports Direct (FRAS), Mike Ashley, has come under fire for initially refusing to close his stores following Boris Johnson’s decision to impose a nationwide lockdown to prevent the spread of Covid-19.
Ashley’s Frasers Group, which also includes Evans Cycles, informed its staff 30 minutes after the announcement that selling fitness and sporting goods made the company a vital asset and its employees key workers.
In a Monday evening email, the group's chief finance officer, Chris Wootton, told staff: “We stock a huge range of sports equipment designed for exercising at home… indeed, home fitness is the number one trending topic on social media after coronavirus itself… Consequently, we are uniquely well placed to help keep the UK as fit and healthy as possible during this crisis.”
Such defiance has proved short-lived however. After a significant public backlash to the already controversial CEO’s decision and criticism from Michael Gove, a senior cabinet minister, Frasers Group announced its intention to adhere to the lockdown requirements and only reopen if “given the go-ahead by the government”.
Sports Direct and its competitor JD Sports (JD) have both suffered from the economic blow inflicted by the novel coronavirus outbreak, with their share prices falling 48 and 49.5 per cent respectively.
Despite this plunge JD Sports is still the UK’s largest sportswear retailer with a market capitalisation of £3.69bn ($4.34bn, €4.01bn), compared to Frasers Group’s £1.16bn.
The firm arguably has stronger fundamentals than its smaller rival. When announcing a delay to its financial results early on Tuesday morning, JD Sports stated that it had the cash reserves to withstand the ongoing crisis.
Evidence for this solid foundation and the contrasting effect of instilling investor confidence and enraging the public can be found in the fact that by mid-afternoon trading JD Sports stands up 13.28 per cent at 412.10 pence, while Frasers Group has only seen a 1.13 per cent gain.
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