Shares in Sports Direct have plunged to a new eight-year low as investors reacted to farcical scenes on Friday when Mike Ashley’s company delayed its results until nearly an hour after the stock market closed.

On Monday in early trading shares dropped by as much as 19%.

The company was called “an embarrassment to UK corporate governance” after the chaotic way it announced the results and the shock revelation of a €674m (£614m) Belgium tax bill.

So what’s going on at the company?

Firstly, who is Mike Ashley?

Billionaire Ashley is most famous for being the founder of Sports Direct, but he also owns Newcastle United.

His empire includes several sportswear brands, as well as lingerie firm Agent Provocateur, luxury fashion chain Flannels – and major shareholdings in Debenhams and French Connection.

He regularly appears in the headlines of the business and sports pages due to various controversies. 

He recently said he was the man to “save Britain’s high streets”.

How do the problems relate to House of Fraser?

The financial report was originally scheduled for release two weeks earlier but the company withheld it, blaming complications relating to the House of Fraser acquisition.

Ashley had promised to turn the department store chain into a “Harrods of the High Street” when he rescued it from collapse a year ago, but on Friday his company admitted problems at the department store were “nothing short of terminal”.

Problems at House of Fraser are so bad, Sports Direct added it would give no financial guidance for this year and would have thought again at purchasing the department store a year ago.

Independent retail analyst Nick Bubb said: “The admission that the self-inflicted problems of House of Fraser are probably ‘terminal’ and that it makes it impossible to provide any earnings growth target this year was unsettling, as was the news that brand relationships with Nike and Adidas have deteriorated again.”

What else is going wrong with Sports Direct?

Several high profile members of staff have left the company in recent months. Jon Kempster, Sports Direct’s chief financial officer, resigned just weeks after Karen Byers, head of retail, quit, and company secretary Cameron Olsen also headed for the door.

Sports Direct has had mixed relationships with its key suppliers, with some complaining in the past that Ashley’s stores have been too messy and downmarket.

As a result, Ashley embarked on an “elevation” programme to improve the store layout, which had some success.

But retail analysts were unimpressed. They said: “Friday’s delays and general nonsense weren’t ‘Just Mike’ or maverick or slapstick, they were an exasperating and rude means of avoiding wide analytical questioning on the very disappointing [2019].

“The home truths about the core Sports Direct business were pretty shocking and management seems to be out of ideas.

“The elevation programme isn’t currying favour with brands and the shopper has moved away from the core SD.

“This is far more important than any tabloid headlines the chief executive may garner, and probably more share price relevant than the Belgian tax claim.”

Sports Direct defended its handling of the matter after the stock market closed on Monday.

It said it didn’t receive notice of the tax bill until midday on Thursday and contacted its lawyers immediately. Further details of the demand were not provided until 11pm on Thursday, meaning its auditor Grant Thornton had to update its audit the next day.

This isn’t the first bump in the road for Sports Direct. What happened before?

Ashley was accused of running Sports Direct like a Victorian workhouse, building his success on a business model that treats workers “without dignity or respect”, according to a scathing parliamentary inquiry.

The comments came following a Guardian investigation into conditions at the Sports Direct warehouse, which found staff were searched daily, harangued via tannoy to hit targets and can be sacked in a ‘six strikes and you’re out’ regime.

During the scandal, Ashley admitted to MPs that staff in the warehouse were earning less than the minimum wage due to long queues at security checkpoints.

Despite initially refusing to give evidence to MPs, Ashley appeared before the committee in June and admitted his company had broken the law by failing to pay staff the national minimum wage.

Sports Direct responded to last year’s reports by announcing an internal review of the retailer’s working practices to be led by Ashley, plus a pay rise for staff, which the company said would cost it £10m.

A few months later, the company was hit by further scandal when a BBC News investigation revealed ambulances had been called to the headquarters of Sports Direct 82 times during a two year period amid reports workers were “too frightened” to take time off sick.

Three calls were about women having problems with pregnancy, including one who gave birth in the building’s toilets. Others involved “life-threatening” illnesses including chest pains, breathing problems, convulsions and strokes.

At the time, the company said it takes any allegation that it may have breached health and safety or employment regulations “very seriously”.

Could Sports Direct go under?

Neil Wilson, chief market analyst at Markets.com – who branded Sports Direct a “shambles” over its handling of Friday’s results – said: “The situation for Sports Direct is not good, but it’s too early to write off Mr Ashley.

“His mercurial style and talents have always raised eyebrows in the City. Whilst there are clearly many doubts about the elevation strategy, among others, we are in no doubt that Mr Ashley is the master of the stack ’em high approach.”

And analysts at Jefferies were even more positive, urging its clients to buy shares and calling the concerns “overdone”.

“The elevation strategy is working, leading to improvement in ranges, Flannels performance is strong, the core business has been robust against a challenging backdrop and the balance sheet remains strong with net debt actually falling 5%.”