* Majority of independent investors refuse to back chairman
* Board rejects chairman offer to step down
* Firm forecasts 21 pct slump in year profit
* Shares down 9 percent
(Repeats to add link to BREAKINGVIEWS story. No change to text)
By Paul Sandle
SHIREBROOK, England Sept 7 Mike Ashley, the
billionaire majority owner of troubled British retailer Sports
Direct, came out fighting at a stormy annual meeting on
Wednesday, ignoring calls for his chairman to quit and clashing
with the country's biggest labour union.
With politicians condemning Sports Direct for "Victorian"
working conditions and its stock down 60 percent in a year,
independent shareholders targeted Chairman Keith Hellawell, with
a majority of them failing to back his reappointment.
Ashley, the founder of the discount sportswear chain who
still holds a 55 percent stake, repeatedly apologised for what
he said were serious mistakes in the way staff were treated and
vowed to rebuild the firm.
But an attempt at salvaging its image - by inviting
journalists and the public to an annual meeting and a warehouse
visit - quickly unravelled when he clashed with those attending.
Facing criticism over the way he ran his firm, he accused
one shareholder of not being "open and honest" and told a
representative of trade union Unite to stop "showboating". He
told the Unite official: "It's probably your fault we're in this
Ashley later told reporters he was sorry for what had
happened. "Clearly I could have done a better job. I didn't
knowingly do it badly, I certainly didn't deliberately do it
badly. But I don't want the headline 'excuses', I want the
Recognisable to many Britons as the owner of Newcastle
United soccer club, Ashley often shuns the sharp suits and
carefully cultivated images of other top company bosses. When he
demonstrated a security check at his warehouse on Wednesday he
emptied his pockets, taking out a bundle of 50 pound notes.
Founded in 1982 on a quiet road in southeast England, Sports
Direct has grown into a major force on British shopping streets,
with discount offers luring shoppers into its 450 stores.
Having floated in 2007, the firm grew to a market valuation
of 5.5 billion pounds in 2014. But that has fallen sharply this
year after the Guardian newspaper revealed the firm had
effectively paid some workers less than the minimum wage.
On Tuesday, Sports Direct published the results of a review
that identified "serious shortcomings" in practices at its
warehouse in Shirebrook, central England, where it employs
thousands of agency workers.
The review undertaken by its legal adviser RPC followed
publication of a report by lawmakers in July which said the
company treated workers at Shirebrook "as commodities rather
than human beings".
The firm has pledged to improve corporate governance,
appoint a worker's representative to its board and offer
directly employed shop workers the option of switching to
contracts that offer a guaranteed minimum amount of work.
But some investors don't feel the report went far enough.
Euan Stirling of Standard Life, which owns 5.8 percent of
Sports Direct's equity, told the meeting he wanted a full and
independent review of governance. He voted against the
remuneration report and reappointment of non-executive
"We are longstanding shareholders in the company and have
engaged with senior executives and non-executives over many
years, sadly to little effect," he said.
Several other investors, including Legal & General, had said
they would oppose the re-election of Hellawell. Shareholder
Royal London said his position was untenable.
Despite this, Sports Direct said it rejected an offer by
Hellawell to resign, and with Ashley owning a controlling stake,
he prevailed over minority investors.
"I have accepted the board's request for me to stay,"
Hellawell told reporters after the shareholder vote. "I will
help this company improve and will be judged on my performance
very clearly by the investors at the next AGM."
Hellawell told the meeting, held at Shirebrook, he would
step down next year if he did not receive the backing of
independent investors. He also said the firm was seeking to
beef-up its board with new independent non-executive directors.
To cap off a difficult day, Sports Direct also warned
2016-17 profit was expected to fall 21 percent due to lower
gross margins and higher operating costs, and said Ashley had no
plans to take the company back into private ownership.
Sports Direct said it expected underlying earnings for its
financial year ending next April to come in around 300 million
pounds ($402 million). The group, which had previously not given
a profit forecast, made comparable earnings of 381.4 million
pounds in the year ended April 24, 2016.
Its shares closed down 9 percent at 319.3 pence, a 59
percent drop in the price in the last year.
The firm said it remained unhedged on the sterling/dollar
exchange rate, whose recent decline has made importing goods
into Britain more expensive, with the policy under review.
($1 = 0.7455 pounds)
(Writing by Kate Holton and James Davey; Editing by Mark