Sneaker king falls over: Peter Cowgill’s sudden departure from JD Sports points to more trouble at the retailer, says ALEX BRUMMER
As the executive chairman of JD Sports, which is among the most successful of UK retailers, Peter Cowgill has led a charmed life.
In these days of fussier corporate governance, shareholders have been willing to look through Cowgill’s accumulating missteps on the grounds that he delivered handsomely.
JD’s main investor, Pentland Brands, vehicle of the philanthropic Rubin family with a 49 per cent stake, has stuck by him through thick and thin.
Stepping down: JD Sports boss Peter Cowgill has resigned from his position as executive chairman after 18 years in the role
In 2021 Cowgill received punishment when some 51 per cent of independent investors voted against a £4.3billion bonus paid in the midst of pandemic.
More recently, JD Sports and Footasylum were fined just under £5million by the Competition & Markets Authority after Cowgill and his opposite number Barry Brown held a secret car-park meeting amid a takeover.
Landlords also were highly critical of Cowgill for the refusal of companies under his control to pay rents in the pandemic in spite of weathering Covid assisted by the break on business rates.
Having survived all of this Cowgill’s departure with ‘immediate effect’ – words used sparingly by the boards of public companies – points to more trouble under the bonnet. The decision to replace him comes amid a review of ‘governance and controls’.
It goes without saying that Cowgill has been allowed to drive a coach and horses through rules requiring separation of chairman and chief executive roles for many years.
Among the reasons for limiting the power of dominant figures in public companies is to protect shareholders, colleagues and the well-being of the company from excesses which can mask deep-seated accounting and other problems.
The emergency succession, with head of the audit committee Helen Ashton stepping up as interim chairman, suggests a strong hand with balance sheet and risk background is needed at the tiller.
Kath Smith, the senior non-executive with knowledge of former Pentland brands such as Reebok, becomes chief executive.
None of this will be enough to staunch a further fall in the shares, down 6 per cent yesterday when the market closed.
Anyone who has tried to buy a new car over the last year could not but be aware of the shortage of semi-conductors.
What is less discussed is the UK’s vital role in this industry. So it is timely that Business Secretary Kwasi Kwarteng has ordered a full security review of the proposed purchase of Newport Wafer Fab by Chinese-controlled predator Nexperia.
The probe comes as the future of Cambridge-based Arm Holdings, a global champion in the design of smart chips, is in the balance. American rival Nvidia dropped its $40billion offer after competition authorities on both sides of the Atlantic muscled it out.
Semi-conductor shortages, a consequence of Covid, will not be around for ever. But what cannot be replicated easily are the skills, R&D and patents which are driving Britain’s technological edge in this area. That is precisely why US and Chinese interests are so keen to acquire UK expertise.
This government has been more squeamish about disposing of the family jewels than its Tory predecessors, which cavalierly came close to selling out AstraZeneca and BAE, and allowed Arm to fall into the unsafe ownership of Masayoshi Son’s SoftBank.
It is a source of relief that the business committee of the House of Commons, headed by Darren Jones, is launching hearings into the UK’s semi-conductor industry and the security of the supply chain.
This should not be dismissed as hot air. The probe into Philip Green’s ownership of BHS was among the more dramatic investigations of recent times.
The probing of Pfizer, over its proposed £69billion takeover of Astra in 2014, prompted Pfizer’s British chairman Ian Read to march off into the sunset. For the record, Astra’s market value is now £169billion.
British science and technology is not forsale.
Class action suits have had limited success in the UK.
So it is encouraging an action, funded by legal finance group Therium, on behalf of 70,000 Volkswagen diesel car owners has successfully sealed a settlement of £193million.
Small beer in comparison with the multi-billion pay outs secured by US litigants over VW’s cheating on emissions. But it is a victory for consumers which sets a precedent.