Sports Direct is part of the Frasers Group
(Picture: Sports Direct)The imperative for Mike Ashley’s heir-apparent to steer his soon-to-be father-in-law’s “bricks not clicks” retail chain into the digital age was laid bare on Thursday, as it reported a brutal hammering from the pandemic.
The tracksuit tycoon, 57, today confirmed plans to step down as CEO of Frasers Group next May and hand the reins of his £3 billion Sports Direct, Flannels, Evans Cycles and Lillywhites empire to Michael Murray, 31 — who is engaged to Ashley’s daughter Anna.
Ashley’s departure as top boss brings to an end a colourful, often controversial 40-year High Street saga. It was greeted with a 3% share price slump, before the shares improved to edge up 4.82p, or 0.8%, to 619.82p, as investors digested the big updates.
Frasers Group recorded a pre-tax profit of just £8.5 million in the year to April 25, down a staggering 94.1% from £143.5 million the year before.
That was in part due to impairment charges on its property assets.
It said sales in its sports retail business dropped by 10.7% after it was hit by pandemic closures, while its lifestyle business, which includes brands such as Flannels, saw 1% sales growth.
Although the firm’s online business has continued to grow, as non-executive chair David Daly put it today: “We are predominantly a bricks and mortar business.”
Murray, currently Frasers’ “head of elevation”, once ran student nights while studying for a real estate degree, and has been seen in the City as helping to modernise the business.
That has included bringing in more upmarket brands, and introducing more tech to physical shops.
He recently told the Evening Standard that a £10 million makeover of the Sports Direct flagship on Oxford Street created “the most digitally enabled store we’ve ever done”.
The West End site now features a gaming experience area where customers can challenge VIP guests to a FIFA game, a bra finding zone supported by tech, phone charging points, and tablets to order any sizes not available on site.
Two Sports Direct branches in Birmingham and Manchester are also due to get a big tech-focused revamp.
Richard Lim, chief executive of Retail Economics, said: “The pandemic has accelerated the shift towards online and the purpose of stores will have to evolve rapidly.”
Lim added: “The future will require stores to perform multifunctional purposes, serving their online channel, providing meaningful experiences and building the brand.”
Frasers’ Ashley said today: “The group is continuing to invest in its physical and digital elevation strategy and our omni-channel offering is growing in strength.
“Our stores in the UK have reopened above expectations and our online channel continues to significantly outperform pre-Covid-19 periods.”
Frasers Group said: “The group’s elevation strategy is transforming the business and receiving positive feedback from consumers and our brand partners.
“The board consider it appropriate that Michael leads us forward on this increasingly successful journey.”
Retail analyst Nick Bubb said: “The group could do with more single-minded focus on the elevation strategy and less M&A distraction.” He added Murray “seems to be sensible”.
AJ Bell’s Russ Mould said: “Ashley has often been unpredictable, outspoken and uncooperative. Murray might bring a sense of order to the boardroom.”
