Shirebrook-based Frasers Group plc, formerly called Sports Direct, said on Thursday its maverick CEO Mike Ashley plans to step down on May 1 next year and be succeeded as CEO by his 31-year-old future son-in-law Michael Murray.
Ashley, 56, plans to remain on the Frasers board as an executive director, and he retains 64% of the group’s equity. He also owns Newcastle United.
Murray is engaged to Ashley’s daughter Anna and currently holds the job title of “head of elevation” in charge of modernising the group’s store estate.
The CEO move was announced alongside full-year results which showed a 29.4% rise in core earnings in the year to April 25 as a strong online performance offset a hit from store closures due to the COVID-19 pandemic.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were £390.8 million, up from £302.1 million in 2019-20, despite an 8.4% decline in revenue to £3.6 billion.
Property impairment charges of £317 million meant reported pretax profit fell 94.1% to £8.5 million.
Frasers Group provided no guidance for 2021-22 due to COVID uncertainty.
“The board of Frasers is now in discussions with regards to transitioning the CEO role from Mike Ashley to Michael Murray over the course of FY22,” said Frasers.
“It is currently proposed that Michael Murray will assume the role of CEO on 1 May 2022.
“A reward and remuneration package is now under consideration on the assumption Michael Murray will assume the CEO role.
“Any reward and remuneration package will be subject to any requisite shareholder approval.
“The group’s elevation strategy is transforming the business and receiving positive feedback from consumers and our brand partners, especially on projects such as the new Oxford Street Sports Direct which opened in June 2021.
“The board consider it appropriate that Michael leads us forward on this increasingly successful elevation journey.
“Should Michael Murray assume the CEO role, Mike Ashley would step down from the CEO role at the same time but would remain on the board as an executive director.”
AJ Bell investment director Russ Mould said: “Frasers’ results demonstrate how the resurgence of lockdowns and restrictions on trading knocked the retail sector for six at various points over the past year.
“Sales were down in all divisions of the group apart from its Premium Lifestyle arm.
“Chief executive Mike Ashley should be pleased that part of the business is doing so well given how it is central to the group’s efforts to go upmarket.
“Despite having one of the worst names in modern retail, the Flannels brand is Frasers’ ticket to grabbing a bigger share of the premium end of the sports and fashion market.
“The group has ramped up advertising to raise brand awareness of Flannels and it will also use the name to roll out big stores across the country.
“Under the Sports Direct brand, Frasers has truly cracked the ‘pile it high, sell ‘em cheap’ model of sports goods and clothing.
“Key to this success is owning a variety of well-known brands such as Slazenger which means it can make better profit margins for those items.
“Nevertheless, some third-party brand owners such as Nike no longer want their products to be squeezed into a tiny space in Frasers stores that often resemble jumble sales.
“Consumers also want a better shopping experience in physical stores, so Frasers has been forced to make a shift in strategy.
“The Sports Direct stores are starting to look a lot tidier, and the rollout of the upmarket Flannels stores means it can attract a different type of customer who is prepared to pay more for items, as well as pleasing brands such as Nike with how their products are displayed.
“Mike Ashley is a shrewd operator and will do whatever he can to ensure healthy returns for the business.
“He buys brands when they are close to collapse and a tight lid is kept on costs.
“The fact he is pushing the Government hard on changes to business rates therefore comes as no surprise, as a successful campaign could benefit the group financially and strategically as it could enable Frasers to take on some former Debenhams stores and run them under its own brands.
“For all the criticism Ashley receives, he generally has a good eye on what’s happening in the retail world.
“A very cautious tone towards the near-future due to potential Covid flare-ups sends a warning across the sector to be alert to more setbacks.
“The other big unknown is how the business will perform once Ashley steps down as chief executive next year.
“His future son-in-law Michael Murray is taking the top job and one should expect Ashley to still be closely involved in the strategy.
“Ashley has often been unpredictable, outspoken and uncooperative, so Murray might bring a sense of order to the boardroom.
“One thing is for certain, he will take over at a time when a solid strategy has been put in place so don’t expect any radical changes for where the business is going.”