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by GK Strategy 8th June, 2016
3 min read

Mike Ashley and the Power of PR

The link between good PR and commercial value can sometimes be difficult to substantiate. For big business though, it is a universally accepted notion that reputation is important. Mountains of evidence suggests that a poor reputation can have a detrimental impact on the bottom line. One such example is a recent study by Reputation Dividend which said that ‘strong corporate reputations add £1 in every £2 of shareholder value; bad ones destroy £1 of value in £7’. My recent blog about George Osborne’s comments on reputation touched on this.

For this reason, it is to the great frustration of communications professionals when bosses are reluctant to seek and accept reputational advice. All too often we are brought in at the last minute to firefight on behalf of clients, offering much needed counsel at times of great need.

Mike Ashley’s appearance in front of the Business, Innovation and Skills Select Committee was a great example of getting this judgment right – the impact was dramatic.

His was a far cry from a smooth Cameronesque performance, and indeed was quite the opposite. Nonetheless, grounded advice meant that rather than going on the defensive, Ashley opened up, embraced questions and engaged with the panel – an unexpected outcome. Was it full of emotion, missed words and awkward facial expressions? Yes.

At times it made for uncomfortable viewing. However, it did achieve one crucial outcome though. At the cost of admitting he couldn’t be responsible for ‘every single thing that goes on at Sports Direct’, it added a human side to an often maligned company. For all his gaffes, Ashley seemed genuine, honest and didn’t forget his customer group – his individual style as apparent at the start as it was at the end.

Despite his unorthodox style, Ashley took the sensible approach, owning up to many of the issues surrounding mistreatment of workers and admitting that the company’s dramatic growth came at the cost of establishing employment practices which are standard in the retail sector. He went further, promising to make good on incorrect pay offered to staff. There is little doubt that Ashley does not enjoy the limelight but as the session progressed he gained confidence, taking his time over answers, becoming more forthright and surprising MPs – the Financial Times’ Jim Pickard referred to him as a ‘human tidal wave’. For many MPs in the room his performance was convincing.

We were keen to look at the impact of his appearance on the Sports Direct share price. It told a different story to the mainstream media. When the markets opened yesterday, Sports Direct opened at 365pence, down from over 560pence at the start of the year. Whilst he was getting attacked on social media and shamed in the national press, investor confidence started to grow.

 

A number of investors said that it is was critical that issues such as corporate governance were addressed, but over the course of a ninety-minute appearance, the Sports Direct share price saw a near 20pence uplift to 383.50pence. This is one we’ll be watching closely.

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