Scandal takes its toll on Sports Direct as it suffers ‘weak’ brand reputation

Over recent months, Sport Direct has been rocked by controversy. Last year it emerged that many of its warehouse staff were being paid below minimum wage due to a controversial stop and search procedure, following an investigation by The Guardian.

Workers union Unite has been particularly scathing, with a spokesman warning: “If left to their own devices, major companies like Sports Direct and employment agencies will continue to stretch the law and engage in what we believe to be wholly exploitative work practices.”

In the wake of the scandal, Ashley agreed to forgo his £4m bonus and today agreed with HM Revenue & Customs to compensate the impacted warehouse employees.

And according to new research from the Reputation Institute, Sports Direct has suffered considerable brand damage as a result of the negative press.

Its new UK RepTrak study – which measures stakeholder expectations on a scale of 0-100, and groups companies’ reputations as Excellent (80+), Strong (70-79), Average (60-69), Weak (40-59) or Poor (Below 40) – saw Sports Direct’s overall reputation score hit 53. A rate listed within the ‘weak’ zone and putting Sports Direct bottom on a list of 22 comparable brands.

Its reputation score among consumers (of which 6,610 were polled), meanwhile, is even lower at just 43.2.

And the Reputation Institute says the poor performance could hit the brand’s sales. According to the study, only 12% of consumers would definitely buy products from a brand with an average or less reputation score.

In fact, Sports Direct’ shares have fallen 45% over the past 12 months, with analysts expecting its annual sales to fall by up to 2% when announced in July.

Research from YouGov BrandIndex also suggests Sports Direct is in need of a brand rebuild.

Over the last year, its Index score, which includes consumer perceptions of quality, value, reputation and satisfaction, has fallen 0.7 points to -4.7; a fall deemed statistically significant. This means Sports Direct is bottom on a list of the 42 biggest UK high street retail brands.

Its reputation score of -21.8 is only better than Primark and Poundland, while its reputation score, a balance of whether customers would or would not recommend a brand, is -2.4 – making it the worst performing UK high street retail brand.