Bury-based FTSE 100 retailer JD Sports Fashion plc announced on Wednesday that executive chairman Peter Cowgill will step down from his role with immediate effect amid a push for stronger governance at the firm.
The company’s shares fell as much as 6%.
The UK’s Competition and Markets Authority (CMA) announced in February that JD Sports Fashion and Rochdale-based Footasylum had been fined almost £5 million “after breaching the rules around a merger blocked by the CMA.”
JD Sports said on Wednesday that “as a consequence of an ongoing review of its internal governance and controls” it has decided to accelerate the separation of the roles of chair and chief executive officer at the firm.
The company’s new interim CEO is Kath Smith — currently senior independent director.
Smith said that as JD Sports’ business became bigger and more complex “what is clear is that our internal infrastructure, governance and controls have not developed at the same pace.”
Helen Ashton, currently a non-executive director and chair of the audit & risk committee at JD Sports, will become interim non-executive chair.
Ashton joined the JD Sports board in November 2021 and has held a range of executive level roles including at ASOS, Lloyds Banking Group and Barclays, and CEO positions in high-growth private businesses.
“Kath has considerable sports and outdoor industry experience having worked for over 25 years in the sector as managing director of the Adidas and Reebok brands and her previous position prior to joining the board was GM and vice president of The North Face EMEA,” said JD Sports.
“Kath will work closely with the senior leadership team to continue to deliver on the group‘s proven and successful strategy.
“The process to recruit a chief executive officer remains ongoing and a process will now commence to recruit a new non-executive chair.”
Ashton said: “The business has developed strongly under Peter’s leadership into a world-leading multi-channel retailer with a proven strategy and clear momentum.
“However, as our business has become bigger and more complex, what is clear is that our internal infrastructure, governance and controls have not developed at the same pace.
“As we capitalise on the great opportunities ahead of us, the board is committed to ensuring that we have the highest standards of corporate governance and controls appropriate to a FTSE-100 company to support future growth.”
On February 14, the Competition and Markets Authority (CMA) announced that JD Sports Fashion and Rochdale-based Footasylum had been fined almost £5 million “after breaching the rules around a merger blocked by the CMA.”
The CMA said the breaches include the sharing of commercially sensitive information between the CEOs of JD Sports and Footasylum.
JD Sports’ majority shareholder Pentland Brands said new leadership and a change in governance structure were “necessary steps to ensure the long-term, sustainable growth of the business and that JD embraces the scrutiny and responsibility which comes with being a FTSE 100 company.”
Pentland said in a statement: “The JD team, under Peter Cowgill’s leadership, has delivered an unprecedented period of success over a number of years which has led to significant growth in the business and its operations.
“With such growth comes a responsibility to ensure the business continues to evolve its internal organisation.
“As supportive, long-term shareholders we recognise that now is the right time for the business to fulfil its future ambitions under a new governance structure and new leadership.”
AJ Bell investment director Russ Mould said: ” … it’s clear the announcement (of Cowgill’s departure) has created significant concern.
“Cowgill’s immediate departure brings to an end an extremely successful tenure at the top of the sports apparel seller, where he helped the company to be among the best performing names on the stock market before this year’s big sell-off.
“Coming just five months after a £5 million fine was issued by the regulator it appears JD is keen to get its ducks in a row and finally address corporate governance concerns by splitting the role of CEO and chair.
“There are reports Cowgill opposed some of these changes and investors must decide whether the apparent governance improvements were worth losing such a successful leader of the business.”