Mike Ashley spent millions of pounds on flights by helicopter and private jet as his company’s annual profit fell 80%, the latest accounts show.
The Sports Direct owner’s family also received more than £100,000 of hospitality at Newcastle United, Ashley’s football club.
Ashley’s spending was revealed in the annual accounts for Mash Holdings, through which the billionaire owns his businesses.
Mash’s revenue rose to £3.5bn in the year to April 2018 from £3.3bn a year earlier. But profits fell to £20.9m from £102m as profit on the sale of Dunlop and JD Sports shares in 2017 was not repeated.
Ashley also suffered a £76m writedown on his investment in Debenhams. Ashley has failed in his attempts to overturn a compulsory voluntary arrangement at Debenhams after the department store chain went into administration, wiping out the near 30% stake owned by Sports Direct.
The latest accounts show Ashley’s spending on “use of the company jet and helicopter” tripled to £2.1m and his family were treated to £113,000 of matchday hospitality at Newcastle, up from £78,000 a year earlier.
Ashley has defended his use of the plane and helicopter, which he has boarded to leave Sports Direct annual meetings in the past.
“I do fly to work by helicopter,’ he told the BBC three years ago. “I don’t get paid a salary but I do like to go by private plane. It saves a lot of time and is very efficient.”
What’s the problem?
Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as the coronavirus pandemic. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result.
In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores.
At the same time, there is a move away from buying "stuff" as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit and the coronavirus, have coincided with economic and political uncertainty that has dampened consumer confidence.
What help do retailers need?
Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. Many businesses which deal with complex supply chains also want additional help with the new red tape and import charges imposed after Boris Johnson's Brexit deal saddled them with extra costs.
What is the government doing?
In the December 2019 Queen's speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m "future high streets fund" under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.
The accounts set out Ashley’s retail spending spree during the year, including the purchases of House of Fraser for £90m, Evans Cycles for £8m, Jack Wills for £12.8m and a shopping park in Hertfordshire for £25.4m.
Ashley’s splurge on retail assets has raised eyebrows with some analysts questioning his moves to buy up ailing businesses with the high street under pressure. The accounts for the current year are likely to be hit by the disastrous performance of House of Fraser, which he revealed was losing £1m a week.
