UK’s Sports Direct dives after auditor Grant Thornton quits
The UK retailing group, whose shares dropped 9%, is now looking for a Big Four audit firm, which is not proving easy
London — British retailing group Sports Direct has followed up a statement announcing the departure of its auditor Grant Thornton with another saying its board is comfortable with its latest accounts.
Shares of Sports Direct, led by Newcastle United owner Mike Ashley, were 9% lower at 214.8p by 2.23pm GMT on Wednesday.
Sports Direct, whose results were delayed last month after it received an 11th-hour tax bill from Belgian authorities that had to be assessed by Grant Thornton before it could sign off the numbers, said in an initial statement that the auditor had decided to quit following a review of its client portfolio.
It then issued a further statement, jointly with Grant Thornton, saying it had a longer-term aim of looking to engage an auditor from the “Big Four” group of accountants, who check the books of most of Britain’s top companies.
The statement said the audit profession as a whole is reviewing client portfolios for, among other reasons, audit profitability, at a time of increased regulatory scrutiny.
“Grant Thornton’s review of its client portfolio alongside Sports Direct’s future intentions on engagement of a Big Four auditor has led to a decision by Grant Thornton to not seek re-appointment as Sports Direct’s auditor,” the statement said.
“The board of Sports Direct is comfortable with SD’s accounts for the period ended April 28 2019 and believe a fully robust audit was carried out of Sports Direct’s financial statements.”
Grant Thornton, the group’s auditor since 2007, will not seek re-appointment at next month’s annual shareholders’ meeting of Sports Direct, which has expanded beyond its sportswear foundations with a string of acquisitions, including struggling department stores group House of Fraser.
Ashley has lately admitted that buying House of Fraser may have been a mistake.
In its results statement in July, Sports Direct said Grant Thornton had “vast experience” of the company and it intended to re-appoint the firm for another year, and said discussions with other members of the Big Four had thrown up barriers, including potential conflicts of interest and, in the case of PwC, a reluctance to engage with Sports Direct.