Mike Ashley, majority shareholder of Sports Direct International, has blamed soaring online sales for the British retailer's failure to adjust all of the infrastructure at its huge warehouse in Shirebrook, as he finally attended a parliamentary hearing on Tuesday, June 7 regarding the treatment of workers at the company.
Ashley appeared before the parliamentary select committee for skills, business and innovation after several weeks of arguments about the procedure. The retailer's executive deputy chairman initially refused to attend unless committee members first visited the warehouse, leading to a formal summons and suggestions that he might face charges of contempt. Ashley eventually relented on the Sunday before the scheduled hearing. While he was visibly irritated as he started answering questions at Westminster, flanked by his public relations adviser, Ashley gradually loosened up.
Ashley admitted that some workers at the warehouse were paid less than the minimum wage for a specific time due to “bottlenecks” with security, which held up staff after they clocked off. He said this issue had been resolved, with a much larger security allowing many more people to rapidly walk through, but he added that his review was “work in progress” and refused to be pinned to any deadline.
Ashley confirmed that SDI was in talks with the British tax authorities regarding back pay for the workers. British media have reported that SDI could face a bill of more than £20 million (€26.0m-$29.4m) to compensate staff. After allegations about working practices were published in The Guardian last year, Ashley raised pay above the national minimum wage.
Ashley argued that these bottlenecks had been caused by the rapid growth of online sales in the last ten years. It entirely changed the function of the warehouse and required its rapid expansion, to deal with a huge number of small orders without much automation. SDI's founder more broadly admitted that the company may have outgrown him. He argued that he couldn't be expected to know all that occurred at the company or to singlehandedly solve all of the issues, and agreed to an independent review.
Ashley told the committee that he was “shocked” at some of the stories that were presented to him regarding the treatment of workers and employees. Among these was a report about a female worker who was offered a permanent job if she agreed to go for dinner with a manager, and an employee who was described as “selfish” because she wanted to leave on time. Ashley found it “unacceptable” that workers could be docked for 15 minutes' pay if they were one minute late.
SDI's founder was also questioned about the widespread use of agency workers at Shirebrook and zero-hour contracts that offer few guarantees. Ashley said the company had turned to the agencies to deal with rapid demand but admitted there was an imbalance in these employment practices.
The day before the hearing, in a letter to the company's staff, it was announced that Dave Forsey, chief executive at SDI, would not be taking his four-year share bonus, which would have been worth about £4 million next year (€5.2m-$5.9m).
The company has had a turbulent year, with two profit warnings that led to a sharp drop in the company's share price and caused it to lose its place in the FTSE 100 Index. The share price picked up after Ashley's appearance at Westminster, but some commentators voiced concerns in British newspapers about Ashley's admission that he wasn't entirely informed about all that is happening at the company.
