Ashley's 'balls of steel' bearing fruit?

A novel experience for Mike Ashley's Sports Direct: a trading update that went down well in the City...

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Last Updated: 06 Nov 2012

It’s not exactly been the greatest twelve months of the maverick retailer’s career. His company’s share price has sunk like a stone since he floated it a year ago, while his Premiership club Newcastle United looks like it might soon become Championship club Newcastle United.

But in Thursday’s trading update, Sports Direct reported sales of £317m for the 13 weeks to January 27, leaving it well on course to meet its (recently raised) full-year profit forecast of £148m.  It even issued a statement that ran beyond one page, which is pretty unusual for a company that’s taken a rather ‘relaxed’ attitude to disclosure conventions.

And believe it or not, its share price actually rose as a result – just about the first time this has happened after a trading update. Admittedly it’s only gone up 6p to £1.14, which is still a mile below its float price of £3.00. But at least it’s an improvement on the low of 84p that it reached in December – when Ashley branded the City’s price as ‘pathetic’. Some analysts have even started encouraging people to buy the stock. Could it be that Ashley ‘hate-hate affair’ with the City might yet have a happy ending?

If so, it’s certainly not down to any diplomacy on his part. After firing his PR firm, falling out with his chairman and alienating analysts, he eventually broke his silence to accuse the City of acting ‘like a bunch of cry babies’ – whereas he, on the other hand, had ‘balls of steel’. That’s why he’s been buying back shares to take his stake above 70% again - which has also helped to prop up the stock price.

But after the endless stream of bad news, there do appear to be a few green shoots of progress. A tie-up to sell its brands in China is apparently progressing ahead of schedule, relationships with major suppliers Nike and Adidas seem to be improving, and it’s looking at other similar deals elsewhere. And let’s face it – after the year it’s just had, surely things can only get better in 2008.

It’s a pity the same thing can’t be said for his hapless football team. At the moment new Sports Direct CEO Dave Forsey is looking a rather better appointment than Kevin Keegan...

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