Retailer JD Sports Fashion has revealed plans to review its corporate governance and internal controls as it looks to “draw a line in the sand” following the departure of its long-term boss and a series of competition investigations.
The sportswear group said a series of independent investigations into “certain matters” and a governance review had highlighted the need to strengthen its board and improve the way business is run.
Helen Ashton, interim president of JD Sports, said the group had drawn up an 18-month plan to “reshape the governance, risk and control environment” at the group.
Peter Cowgill, CEO of JD Sports (JD/PA)
It follows the controversial departure of chief executive Peter Cowgill last month after 18 years in the role, just three months after JD Sports was fined £4.3m by the competition watchdog for swapping information with Footasylum, which it had agreed to buy at the time for £90m.
The watchdog had blocked the deal a few months earlier, but not before Cowgill met his counterpart at Footasylum in a Bury car park, according to video seen by the Sunday Times.
JD said last month that Cowgill would resign after the governance review, but it is widely speculated that he was sacked amid disagreements over planned changes at the top, with JD poised to split the role of chairman and chief executive.
Ms Ashton, interim president of JD Sports, told the PA news agency: “We feel like we have drawn a line in the sand and we understand where we are.
“We have put together a very clear plan of action and we have 18 months to get there.”
He added that the group’s new board alignment is focused on ensuring that JD Sports leaves behind harmful competition investigations and fines.
Just weeks ago, the CMA said it provisionally found that JD Sports conspired, along with sporting goods firm Elite Sports and Rangers Football Club, to fix the prices of Rangers club clothing.
“That’s not what we expect as a board of a FTSE 100 company,” he said.
But he added: “We want to be very careful not to lose the magic of JD as we build that governance structure.”
Despite recent scandals, JD Sports’ long-delayed full-year figures released on Wednesday showed it made a record £947.2m in annual earnings, more than double the year’s £421.3m. previous.
Statutory pre-tax profits rose to £654.7m in the year to 29 January from £324m a year earlier as demand for sportswear showed no signs of slowing .
But JD Sports, which markets itself as the king of trainers, has warned that underlying earnings will remain flat in the current fiscal year due to the cost-of-living crisis and broader economic uncertainty.
Ms Ashton said: “While we are encouraged by the resilient nature of consumer demand in the current year to date, we remain mindful of the prevailing headwinds at the moment.”
He said the search for a new chief executive was continuing, with a “number of high caliber candidates at various stages of consideration”.
Some last-minute contenders had come forward since Mr Cowgill’s departure, he revealed.
Board member Kath Smith, who has worked for Adidas and Reebok in the past, has taken the helm as the company searches for a new CEO.
The company’s search for a new non-executive chairman is also “progressing apace,” the group said.
The group added that it has repaid the £24.4m furlough scheme support its UK companies received during the year to January 29, but would not repay the full £61m received during the pandemic.
Source: www.independent.co.uk