Trouble doubles for Mike Ashley: exit of Sports Direct from FTSE100 after value halves

Sports Direct, the retailer founded by Newcastle United owner Mike Ashley, faces a highly likely exit from the FTSE100 on Wednesday when the quarterly review of the benchmark index’ members is announced.

In barely five months, various profit warnings, declining sales and a series of labour and public relations bumps have taken their toll on the company’s value, now halved to 2.3 billion pounds.

Sports Direct has been part of the FTSE 100 for two years and a half yet, as of this week, the athletic apparel retailer is likely to join Aberdeen Asset Management in the FTSE 250 as several contenders queue up to take their places, reports Reuters.

Sports Direct entered the FTSE 100 in September 2013, and two and a half years later, it is likely to be ousted from it. The reason? The company’s market value has since August 2015. In one week in January, the company lost more than one billion in market cap, recalls ‘The Evening Standard’.

Sports Direct place in the FTSE100 at risk

The most likely replacement for Sports Direct within the British benchmark index are Paddy Power Betfair, the resultant company of the merge of the two betting houses earlier this month, valued at 8.9 billion pounds; and private healthcare group Mediclinic.

“Sports Direct has become the latest victim of the tough trading conditions on the UK High Street, exacerbated by weather. The group is now unique in the sector for having warned either side of Xmas that trading had worsened further,“ said Laith Khalaf, senior analyst at Hargreaves Lansdown.

Its shares are currently trading at more than 50 percent below its August 2015 high of 817 pence, points out ‘Business Insider’.

On another note, the sports retailer announced earlier this week that it will no longer borrow via Ashley’s investment vehicle. It said it had previously used a 250 million pounds loan facility with Ashley’s Mike Ashley/Mash Holdings.

Meanwhile, investors in Sports Direct are increasingly at unease with the way that the company is run, and are calling for chairman Keith Hellawell to be fired, reports the ‘Telegraph’.

Also, and according to a report from the ‘Financial Times’, several of the biggest investors in Sports Direct have lost faith in founder and majority shareholder Mike Ashley.

The company’s founder owns around 55 percent of shares in Sports Direct, giving him effective control over the company.