There’s never a dull moment in the world of Mike Ashley. The billionaire founder of Sports Direct, which reports half-year results on Thursday, is fighting battles on multiple fronts.
His football club, Newcastle United, is in yet another relegation scrap in the Premier League and Ashley is taking the Scottish Football Association to court over his dispute with Rangers, in which he owns a stake. Other problems include the charging of Sports Direct’s chief executive, David Forsey, with a criminal offence over the collapse of its fashion chain, USC, and unions continuing to target Sports Direct’s use of zero-hours contracts.
In the latest in a series of interventions in other companies, Ashley is trying to force football-strip retailer Findel to accept one of his nominees on its board. Most shareholders have put up with Ashley’s freewheeling because they believe he is a superlative retailer and that enough of his bets pay off. His purchase of a stake in Debenhams seems to have persuaded the store group to stock Sports Direct goods, moving its customer base upmarket.
When it comes to selling trainers and the like Sports Direct is doing well, as people spend more time in casual clobber. Its upmarket rival JD Sports published an upbeat trading statement last week, which seems to bode well – but then JD steers clear of deals and rows, and sticks to boring old retail.
Ocado left on the shelf?
It must have felt like a good idea early this year when Ocado assured people that it would sign a second distribution deal with a big retailer by the end of 2015. There was lots of interest, so chief executive Tim Steiner said, and plenty of time. Now there’s only three weeks or so to go and the lack of an announcement has weighed on Ocado’s shares, which are down about 20% since July, according to Numis analyst Andrew Wade.
Thursday’s trading statement would be a logical time for Ocado to unveil a tie-up but Wade says an announcement isn’t likely before 2016. Ocado launched as an online grocer selling Waitrose products in 2000 and has fallen in and out of favour over the years. Its fortunes seemed to be transformed in 2013 when Morrisons agreed to pay Ocado to distribute goods ordered from it online. Suddenly, Ocado was a technology and logistics company rather than an internet grocer facing intensifying competition.
The shares’ recent fall may mean there will be no big reaction if there is no deal – it will have been “priced in”. Ocado’s sales should be OK but if there’s no new contract, the old fears about its viability will return.
Hornby hopes for model results
Hornby, which reports half-year results on Tuesday, has had a rocky old year. The maker of train sets, Airfix kits and other hobbyist products started 2015 on the up, making its first profit for three years as sales improved. It also moved its head office down the road to Sandwich, Kent, from its outdated building in Margate and is planning to shift its popular visitor centre to nearby Ramsgate. All very forward-thinking and encouraging after years of profit warnings caused by an unreliable supplier in China.
Then, in September, Hornby said it was struggling to get products from its new Chinese supplier into European shops. Things got worse two months later with a warning predicting a £2m annual loss. Hornby moved its manufacturing to China in the late 1990s to cut costs, but it repatriated production of some Airfix kits in 2013. It may do better to bring back the whole lot, so that managers can keep an eye on things, reduce delivery times and get products on to shelves.
Hornby is a small company but it gets a lot of attention because of the folklore surrounding its products, which also include Corgi cars and Scalextric, and its tie-in contracts for films such as the latest James Bond, Spectre. Despite recent setbacks, the shares are up this year.
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