The so-called retail kingpin has finally tumbled.
After nearly 20 years at JD Sports Fashion PLC (LSE:JD.), Peter Cowgill has left the hot seat at the FTSE 100 company as part of the group’s “ongoing review of its internal governance and controls.”
Announced late yesterday afternoon, the news came as a shock to many.
Since taking control at the helm in 2004, Cowgill has overseen growth in the company’s share price by something in the region of 5,000%.
Having joined as finance director in the 1990s and returned as executive chairman in 2004, he has taken JD to new heights, continuously delivering profits even against the backdrop of macro conditions that have dogged many retailers over recent years.
However, there have been growing clouds of controversy and, given the wording in the release, would suggest recent events played a part in the final decision.
But has JD pulled the trigger too early on Cowgill and may investors come to regret the decision down the line?
Recent controversy
Possibly some of the earliest whispers that Cowgill’s leadership had flaws were reports about the health and safety of its staff at its Rochdale warehouse.
Figures compiled by the Press Association showed that the site in Greater Manchester saw a total of 40 ambulance call-outs in 2018, beaten only by Asos with 45.
Responding to the figures, Matt Draper of Unite union said at the time “The warehouse of some companies risks becoming the dark satanic mills of the 21st century.”
Those numbers only added fuel to an existing fire, where an undercover video released in 2016 seemed to show staff, in the words of former MP Iain Wright, being treated “like cattle.”
Cowgill later also came in for criticism over some of his decisions during the pandemic.
Notably, the 69-year-old defended his £4.3mln bonus while JD accepted £100mln in government support.
He also defended his stance on not repaying the furlough schemes as rivals ASOS and Primark volunteered to do.
This angered shareholders given the current focus on investing in firms that are ESG (environmental, social and governance) friendly.
A £5mln fine for JD related to its aborted takeover of Footasylum may have been the final nail in the coffin.
So, why now?
According to Julie Palmer, a partner at corporate recovery firm Begbies Traynor (AIM:BEG), “when you have a fast-growing business, there’s an additional need for strict corporate governance.”
“The fine on the back of the Footasylum deal was a clumsy own goal for JD, and struck many as a business and executive chairman that does business the old-fashioned way, rather than recognising how business needs to be done.”
Essentially, at least according to Palmer, JD got the sense that given its size and stature now, it was going to be under the microscope and open to a lot more criticism.
Perhaps Cowgill’s methods, while effective, go against what constitutes ‘good’ business practice in the modern era.
Has JD acted too hastily?
What is not in dispute, despite some of the recent news and controversy, is that Cowgill has delivered a “spectacular performance.”
And Palmer thinks that JD may have called time too soon on Cowgill’s reign.
“I just wonder whether they’ll look back and say, did we make that decision a bit too hastily?”
“This is somebody who delivered and delivered on a very spectacular level.”
“Getting rid of someone the way they did looks to me to be a bit hasty, and rather what they should have done is find time to work with him to steadily build behind the scenes.”
But Cowgill’s exit draws the curtains on what has been an era of unprecedented success, which has seen JD move from a small, relatively unknown company to a Footsie giant.
Whether JD lives to regret that decision, only time will tell.