When Sports Direct published its preliminary results for 2016-17 the dramatic slide in its profits captured many of the headlines, but it was its forward-looking statements that captured the attention of analysts and the stock market.
The appointment of a new Chief Financial Officer, the aim to achieve growth of 5-15% in the next financial year and the desire to become the “Selfridges of sports” all sparked optimism and Sports Direct’s share price jumped in response. Populus’s research, however, shows that the company has a long way to go to achieve this objective of emulating Selfridges.
In late 2016, when Populus last measured Sports Direct’s Reputation Credit Score (Populus’s established method for measuring and comparing topline corporate reputations), it was a fairly poor 390 (out of 1,000) – comparable with bookmakers and investment banks.
While its low Reputation Credit Score should be a concern, its relatively high Intensity Score (Populus’s measure of how strongly people feel towards a company) of 520 should also worry Sports Direct.
This combination suggests not only that people in the UK are fairly critical of Sports Direct overall but that they feel strongly about the fact, and that few people are on the fence about their feelings towards the company.
Figure 1: company reputations among the UK public, mapped by Reputation Credit Score and Intensity Score (each dot represents a different company)
In the UK, just 12% of people say they feel favourably towards Sports Direct and 33% say they feel unfavourably. Some light can be shed on why this is the case: 43% think it performs poorly when it comes to behaving as a responsible company should; and just 9% of the UK public say it performs well at making them feel proud to associate themselves with the company.
Clearly, there are issues that the company needs to deal with in terms of how it is perceived, as its reputation is currently closer to that of William Hill or Ladbrokes or Uber (all companies ripe for further regulation rather than that of the more popular retailers like M&S or John Lewis).
Of course, companies want to have reputations for the right thing. And Sports Direct might argue that, as long as it has a reputation for low prices, it won’t worry about other issues. Its behaviour and recent announcements, however, would suggest the company is worried about how it is perceived.
The “Selfridges” of sports?
Its growth strategy is ambitious, as is its desire to become the “Selfridges of sports”. Increasingly it will have to address the issues that have dogged it over the last few years or else risk disappointing the ever-increasing demands of investors, regulators, and customers.
These issues have not only included a steady stream of negative news stories about pay and working conditions, there have also been more personal attacks on the company’s management. In fact, some of the stories about Mike Ashley’s seemingly unconventional approach have probably added to the challenges facing the company. Management perceptions will, therefore, also need to be addressed.
In fairness, its results announcement suggests the company is now attempting to deal with some of those problems. The company has hired a new CFO, claims to have launched a rolling initiative to capture staff feedback called ‘Your Company, Your Voice’ and says that a further 360° review (including working practices and corporate governance) will be led by the company’s legal advisors.
But when it comes down to it reputation is about what you do, not just what you say. So while Sports Direct’s recent statements of intent appear to have been well received, the company will have to evidence progress in order to convince stakeholders (including investors) of success.
Only then will the company be able to take up a new – more respected – position in the UK retail landscape.
Populus’s reputation measurement approach, developed over 13 years, is a proven series of tools, techniques and analysis which allows reputation to be understood, influenced and improved. Find out more about Populus’s Reputation Measurement approach by calling +44 20 7253 9900 or emailing firstname.lastname@example.org