Debenhams’ shares soared as much as 40 per cent on Friday morning after news of a boardroom coup by Sports Direct boss Mike Ashley.
The billionaire retailer said on Thursday he would step down as chief executive of Sports Direct to take a senior role at Debenhams, if the department store chain’s shareholders vote in favour of his plans. He also called for the ouster of all but one of the Debenhams’ board, with finance chief Chris Wootton stepping up to become acting chief executive.
The Debenhams shares shot up before falling back to trade 13 per cent higher at 3.5p, still a tiny fraction of their peak of £2 back in 2006.
Sports Direct, which owns 30 per cent of Debenhams, said it would provide more detail on its rationale for the radical shake-up in due course.
Under the proposals, Mike Ashley would take executive control of Debenhams, without having to stump up the cash to buy the 70 per cent of shares that Sports Direct does not own.
The surprise move would see Mr Ashley leave his role as boss of a company valued at £1.4bn, to lead Debenhams, which is worth around £40m.
Laith Khalaf, senior analyst, Hargreaves Lansdown cautioned against reading too much into the share price rise.
“Debenhams is in dire straits already and so the potential for change has been received positively by the market,” he said.
“We wouldn’t get too carried away with what the share price move means, the stock is small and targeted by short sellers, so any sort of news tends to lead to big price swings, up or down.
“Sports Direct shares are modestly down on the back of this announcement. Such an unnecessary change of CEO looks somewhat disrespectful to other shareholders of Sports Direct, but then, those who hold the stock must surely have already come to terms with Mike Ashley’s unorthodox style.”
On Tuesday, Debenhams issued its fourth profit warning in quick succession.
In February, the chain received a £40m cash injection from lenders, allowing it to pursue long-term refinancing.
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