Mike Ashley is set to step down as chief executive of Frasers Group, the owner of Sports Direct, in May next year and hand over to his daughter’s fiance.
The company, which also owns the House of Fraser department stores and the designer fashion chain Flannels, said it was in discussions about “transitioning” the chief executive role to 31-year-old Michael Murray, who is currently Frasers’ “head of elevation”.
The Doncaster-born son of a property developer began by helping Ashley with personal property deals a few years after meeting his daughter Anna on holiday in 2011.
The former club promoter has become Ashley’s right-hand man, overseeing a revamp of Sports Direct stores as well as expanding Flannels, improving the group’s use of technology and building relationships with high-end brands.
However, Murray is not on the company’s board, or even an employee, but is employed as a consultant, and paid up to 25% of any value he creates from property deals.
That formula resulted in Frasers handing Murray £9.7m in total over 2019 and 2020. In the past year he was paid £2.5m related to his property services and a further £100,000 for his “elevation” work.
In a statement issued on Thursday alongside its annual results, Frasers said a new reward package was under consideration on the assumption Murray would take on the chief executive role on 1 May 2022.
He is set to take over as chief executive five years after Ashley took on the role, stepping in after the resignation of Dave Forsey, his long-term right-hand man.
In a statement, the company said that Ashley would remain on the board as an executive director.
It added: “The group’s elevation strategy is transforming the business and receiving positive feedback from consumers and our brand partners, especially on projects such as the new Oxford Street Sports Direct which opened in June 2021.
“The board consider it appropriate that Michael leads us forward on this increasingly successful elevation journey.”
The potential change in leadership came as sales at Frasers Group slid 8.4% and pretax profits dived 94% to £8.5m in the last financial year, as the company wrote down the value of stores and investment properties by £85m in light of the switch towards online shopping during the pandemic.
The group closed five House of Fraser stores during the year, taking the total to 43, down from almost 60 when it was acquired three years ago.
The Frasers chairman, David Daly, warned that more House of Fraser stores may have to close if there was a return to full business rates, after the tax holiday during the past year. He said the company wanted to take on former Debenhams outlets but “excessive business rates” made the viability of such investments less likely.
“There must be a change to the outdated business rates system for us to justify the survival of some of these House of Fraser stores,” Daly said.