JD Sports made attempts to reassure investors yesterday after red flags were raised by the sudden departure of Peter Cowgill.
Shares continue to drop over eight per cent in early morning trading, with shares down over 16 per cent this week.
In a meeting hosted yesterday, the company said governance and succession and was not connected to the delay in publishing its annual results.
As reported by interim chair Helen Ashton and reported by the Financial Times, one person said: “There has been no single event and there is no big skeleton in the closet”.
The London-listed retailer announced Cowgill’s exit on Wednesday, stating it had opted to accelerate a separation of the roles of chair and chief executive.
Cowgill’s departure follows JD Sports and its rival Footasylum being slapped with fine worth almost £5m after Cowgill met with Footasylum’s opposite number Barry Brown in a car park to discuss a blocked takeover.
The Competition and Markets Authority (CMA) issued a £4.7m fine after it claimed the two bosses shared commercially sensitive information in the meetings and failed to put proper safeguards in place to prevent rules breaches.
For failing to have safeguards in place, JD Sports was instructed to pay £2.5m and Footasylum £200,000 while JD Sports was fined £1.8m and Footasylum £180,000 for sharing commercially sensitive information, and then failing to alert the CMA.
Helen Ashton, who is presently a non-executive director and chair of the audit and risk committee, is to step into the role of interim chair. A recruitment process to replace Cowgill will now commence, JD Sports confirmed on Wednesday evening.
Ashton’s CV boasts a range of City roles, including stints at ASOS and Lloyds Banking Group in executive levels.
“The business has developed strongly under Peter’s leadership into a world-leading multi-channel retailer with a proven strategy and clear momentum,” Ashton said.
She added: “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.”
Kath Smith will step into the shoes of interim CEO, while the hunt for a new CEO continues. Smith’s career history includes managing director of the adidas and Reebok brands, as well as a stint as vice president of North Face’s EMEA division.
In a trading update earlier this month, JD Sports boosted its profit guidance for the year, with a strong consumer appetite for sportswear and leisurewear.
The firm said it was anticipating annual pre-tax profit to hit £940m.