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SHARE-PRICE FEARS IN SPORT DIRECT FIASCO

David Richardson, left

Saturday June 2,2007

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Shares in sportswear retailer Sports Direct International plunged to a new low of less than 200p a share amid City concerns that the price will fall much further in the wake of chairman David Richardson’s shock resignation.

Analysts fear a “nightmare scenario” for investors — that if the shares plunge, founder and deputy chairman Mike Ashley could buy back the company on the cheap.

The shares closed down 9p to 196p. Pali International retail analyst Nick Bubb said Richardson’s resignation because Ashley failed to communicate properly with City investors represented an “unhappy twist” in a “sorry saga”.

He is also worried over lack of clarity on the company’s trading outlook, adding that it was in a sector with severe problems.

“If the market gives up on Sports Direct, the shares could hit 150p,” he said. “Maybe that’s the rock bottom rating [it] deserves.” Oriel thinks the shares will fall to 180p and analyst Jonathan Pritchard said Richardson’s resignation

“reinforced concerns” about whether it should be quoted: “Sports Direct looks out of place in the public markets.”
Panmure Gordon agreed: “The bad news is there is no property backing. The other bad news is there is no good news,” he added.

Ashley sold a 43 per cent stake worth £929million to institutional investors for 300p a share in February.

A spokesman insisted the company would remain on the stock market. “We are fully committed to being a listed company and are focusing on improving our external relations with all of our stakeholders,” he said.

But the analysts’ views show the magnitude of the task faced by Ashley’s new advisers, investment banks Merrill Lynch and Credit Suisse, and communications experts Financial Dynamics, in restoring the company’s tattered image.
It is believed they were brought on board only after Richardson had decided to leave.