Ashley, who owns nearly 30% of Debenhams shares through Sports Direct, teamed up with the billionaire owner of Milestone Resources, Micky Jagtiani, who has a 7% stake, to vote the two directors off the board at an annual general meeting on Thursday night.
Chairman, Ian Cheshire, stepped down immediately and was temporarily replaced by Terry Duddy, the senior independent director. Chief executive Sergio Burcher will remain in his role for now but not as a director.
A total of 56% of shares voted were against the re-election of both directors.
Chairman says it is 'right I step down'
Cheshire said: “In unprecedented market conditions the team has worked incredibly hard to build a format for the future and a comprehensive plan to reshape the business, which will put Debenhams on the road to recovery and future success. Whilst it is right that I step down today, I wish the team at Debenhams every success in the future."
The board said Sergio would stay on to carry out management’s plan to reshape the business. “The board believes that it is in the best interests of Debenhams plc that the executive team remains fully focused on delivery of the plan,” it said.
“In the meantime, the board remains open to constructive suggestions from shareholders that are in the interests of the business as a whole.”
Debenhams under pressure to make changes
Ahead of the vote, Ashley had been piling pressure on Debenhams to address heavy debts and a slump in sales and profits.
Last month it emerged that Debenhams turned down a £40mln loan offer from Ashley. In a letter addressed to Bucher, Ashley vented his frustration that the company did not want his help, suggesting the retailer "has zero chance of survival" without the money.
Ashely has also previously spoken of his desire to take control of Debenhams. In August last year, he rescued House of Fraser after the department store group collapsed into administration.
In morning trading, Debenhams shares were down 8.4% to 4.41p.