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Mike Ashley: Who is the unorthodox Frasers CEO and how significant is his decision to stand down?

TheIndustry.fashion
05 August 2021

Billionaire Mike Ashley is one of the most recognisable men in British business after building a sprawling high street empire and acquiring a football team to boot.

However, the Sports Direct founder is now planning to hand over the reins of his Frasers Group vehicle to his prospective son-in-law, he has confirmed this morning.

Ashley is set to pass the position of CEO of the group, which also owns a raft of other retail brands from House of Fraser to Flannels and USC, to 31-year-old Michael Murray and take a less prominent role at the firm.

Here we take a closer look at the mercurial man and his colourful history at the forefront of the changing British high street and ask, will his decision to step back really make that much of a difference to the business?

Education and early career

Mike Ashley left school at 16 before first entering the fitness industry as a squash coach.

But in 1982 he decided to try his hand at retail, opening his first high street sport shop, Mike Ashley Sports, in Maidenhead, Berkshire, with the help of a £10,000 family loan.

He steadily grew trade and, buoyed by more regional openings, expanded in London in the early 1990s following an injection of private money.

His chain of stores, now rebranded as Sports Soccer, had grown to an estate of around 100 locations by the turn of the millennium.

The next few years saw a number of rebrands, during which the chain briefly become Sports World, before finding its current guise of Sports Direct.

In February 2007, Ashley floated the business as a public company on the London Stock Exchange in a move which valued it at £2.5bn, although the founder retained a majority stake.

Recent business history

The group built its retail stock following the 2007 IPO and Ashley became a significantly more recognisable figure after he bought majority control of Premier League football club Newcastle United later that year.

Mike Ashley

Mike Ashley at Newcastle United

He has come under criticism regarding his ownership of the club and perceived lack of investment. He is currently seeking a sale after the collapse of a £300m deal with the Saudi Public Investment Fund.

Sports Direct’s initial strong growth period was buoyed by its acquisition of sportswear brands for sale in its stores, including Dunlop, Slazenger and Karrimor.

The last three years have seen the group snap up a variety of distressed UK retail firms, including Evans Cycles, Jack Wills, Game, Sofa.com and House of Fraser.

Last year, the group was renamed Frasers after the department store brand as it started an “elevation strategy” designed to help give the retail group a more upmarket image.

Leadership style

Ashley has gained a reputation for a strong leadership approach which holds no punches and has seen him quarrel with Government ministers and launch legal battles.

Retail analyst Richard Hyman told the PA news agency that the tycoon was not afraid to make strong and bold decisions in a bid to give him an edge in the sector.

“History shows that he will be clear and decisive with his actions,” he said.

“Not every move he has made has been perfect and he is fully aware of that, but he doesn’t mind putting his neck on the line.”

In recent years fund managers with investments in the company have described Ashley as “Elon Musk-esque” and “Donald Trumpian”.

The chief can also be legitimately compared to North Korean dictator Kim Jong-un, the press regulator said, following a spat between him and The Times newspaper.

n 2018, the tycoon complained to the Independent Press Standards Organisation (Ipso) after a piece in the paper suggested he shared many characteristics with the supreme leader of the Democratic People’s Republic of Korea.

Nevertheless, Ipso concluded it was “clearly a polemical comparison” which was a “matter of comment and interpretation” and The Times had been able to show it was made “on an adequate factual basis”.

Controversies

In 2016, a parliamentary inquiry accused Ashley of running Sports Direct like a Victorian workhouse after reports of labour abuses by The Guardian newspaper.

The report by the Business, Innovation and Skills (BIS) Select Committee said the company had used “appalling working practices” and treated “workers as commodities rather than as human beings”.

The group has also come under heavy criticism over its use of zero-hours contracts for workers. Action has since been taken to improve conditions for workers.

Ashley has largely been a mercurial presence but a court hearing in 2017 provided a colourful insight into his working practices.

London’s High Court heard that the businessman once hosted a management meeting in a pub where he drank 12 pints and vomited into a fireplace.

The court heard during a hearing regarding legal action from finance expert Jeffrey Blue that Ashley would hold important meetings during “lock-ins” at the Green Dragon pub in Alfreton, near Sports Direct’s warehouse.

Mike Ashley

Mike Ashley appears in front of MPs

The firm also came under fire at the start of the pandemic after it sought to be considered as an essential business so its employees could continue to work.

Days after facing scorn from unions and ministers, Ashley penned an open letter to apologise for his “ill-judged” response to the pandemic.

Future plans

The retail veteran’s decision to back away from the CEO position appeared surprising but retail analysts have said they think it could still be “business as usual”.

Ashley held the executive deputy chairman position until 2016, with Dave Forsey leading the group as chief.

Richard Hyman added that there was little change in leadership then and he believes it will be similar if Murray takes the top job.

"It doesn’t matter what titles they have, this is Mike Ashley’s business and he will have final say.”

“I just can’t see him going into the shadows and avoiding the decisions – that’s not who is,” he said.

“Perhaps there is a move here to give Michael Murray more limelight and draw more focus to this elevation strategy he has been leading.

“I really think we need to be careful not to look too much at this company through a corporate lens, because it doesn’t matter what titles they have, this is Mike Ashley’s business and he will have final say.”

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