In a recent article, we ask, "Do analysts think you're a lightweight?" It's a question Bob Mellors must be asking himself.
After all, when Sports Direct, the UK-based athletic retailer where Mellors is finance director, listed in London in February, only a handful of bankers could confirm his very existence. Absent from roadshows both before and after the $1.8 billion IPO, in March one analyst wrote about "a rumor in the market that Sports Direct does not have an FD and hasn't done for some time." Mellors has been the company's finance chief since 2004.
The CFO finally surfaced last week at the firm's annual results presentation. If anything, analyst opinion of him sank even lower. In addition to a profit warning, the company failed to produce like-for-like sales numbers, arguing that it isn't a meaningful metric for the retailer (the retailer!). Sports Direct's shares fell more than 20 percent that day, leaving the company worth less than half of its IPO value.
In an extraordinary interview in the latest Sunday Times, Mike Ashley, Sports Direct's swashbuckling founder and largest shareholder, further endears the company to the capital markets by calling analysts "a bunch of cry babies." The article also notes that a dispute over investment banking fees — presumably something that Mellors should be involved in — was settled by Ashley and a Merrill Lynch banker playing a game of Spoof, "a game of chance often played in a pub to establish who buys the next round."
Showing some contrition, Ashley recently admitted that the transition to a listed company could have been handled better, though he did it in typically vague terms unlikely to satisfy disgruntled investors: "I was doing the high jump and it was actually a pole vault."
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