Sports Direct shares tumble as auditor Grant Thornton quits

Shares at Mike Ashley’s Sports Direct fell by more than 11 percent following the announcement that the retailer’s auditor since 2007, Grant Thornton, would quit after the company’s annual general meeting on 11 September.

Sports Direct released a statement on Wednesday saying: “Sports Direct received notice from Grant Thornton UK LLP (GT) that, following a review of its client portfolio, GT intends not to seek reappointment as the company's auditors and will cease to hold office as auditors of the company with effect from 11 September 2019, being the date of the company's annual general meeting.”

The news came just a day after Sports Direct announced its intention to keep Grant Thornton as its auditor for the 2020 financial year.

In the company’s annual report, Ashley described the difficulty his company was facing in appointing one of the “big four” accounting firms – Deloitte, PwC, KPMG and EY - as its replacement auditor. Deloitte carries out the tax work for the group and therefore cannot carry out audit work at the same time, while KPMG, EY and PWC have “indicated there are currently barriers to engaging with [Sports Direct]”, though Ashley said the barriers “are not insurmountable.”

The company has reportedly now asked the government what will happen if it becomes the first major listed business to fail to appoint an auditor, according to The Financial Times.

Mike Ashley’s future son-in law and Sports Direct’s head of elevation, Michael Murray, spoke to both the Sunday Times and the Financial Times over the weekend, and said it would take several years to transform the company - which has in recent years been on a buying-spree of struggling UK retailers - into the “Selfridges of sport”.

“There will be a point when Sports Direct becomes better known for its elevated shops, but it will take a number of years,” he told The Times. “It’s a bit like Primark. No one would have been caught dead in Primark 10 years ago but they’ve managed to keep their value proposition and make it cool and credible.”