Sports Direct shares drop on ruling

Sports Direct shares drop on ruling

Jonathan Browning and Eamon Quinn

Mike Ashley’s Sports Direct International must hand over documents as part of a UK accounting regulator’s investigation into its 2016 financial results, a London judge has ruled. The retailer’s shares tumbled.

The UK’s Financial Reporting Council is probing the conduct of audit firm Grant Thornton and one of its employees after they failed to disclose a business relationship between Mr Ashley and his brother. The regulator is running a parallel investigation into the conduct of an employee at Sports Direct or one of its units, it disclosed yesterday.

Sports Direct must turn over documents and emails it said were protected, according to Judge Richard Arnold. Sports Direct’s shares fell 5.3% to value the retailer at £1.93bn (€2.16bn).

The news is a blow for Mr Ashley who is currently grappling with the potential restructuring of beleaguered department store chain Debenhams, in which he holds a stake of almost 30%. Sports Direct has taken advantage of the problems of other retailers to acquire House of Fraser, which was itself near collapse. Earlier this week, shares in Debenhams, which has 16 stores in the Republic and the North, fell sharply as it confirmed it was considering “longer-term options”, including possible further store closures. The shares yesterday clawed back some of those losses, to close 6% higher.

Newcastle United owner Mr Ashley also owns the Heatons fashion department store chain in Ireland, which has closed some outlets and merged others with Sports Direct.

Acquired two years ago, Heatons has 54 stores across Ireland.

Bloomberg; Irish Examiner

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