Mike Ashley has outlined plans to leave Sports Direct and take the helm at struggling Debenhams, in a move set to stun the City.

The retail tycoon, who is the largest shareholder with a 30% holding in Debenhams, was instrumental in getting its chief executive removed from the board two months ago.

On Thursday night he laid the foundations for a coup.

The department store chain gave no indication of surrender in its response to the statement that outlined how Sports Direct had "requisitioned a general meeting of Debenhams" to appoint Mr Ashley to the board of directors.

Sports Direct said it wanted the removal of all but one of the current board members and for the billionaire to be handed an executive role to turn around the business, which earlier this week issued a fresh profit warning citing higher turnaround costs.


Image: Debenhams has seen its market value eroded as it battles for its future

The statement said that if Debenhams was to come under Mr Ashley's leadership, he would step down as a director and chief executive of Sports Direct.

The statement added that Chris Wootton, Sports Direct's deputy chief financial officer, would be named acting chief executive in that eventuality.

"Sports Direct wishes to reassure its shareholders that, if Mr Ashley were to be appointed to the board of Debenhams and step down from his roles at Sports Direct, Sports Direct and Mr Ashley have every confidence that acting chief executive Mr Wootton and the other members of Sports Direct's board and management team have the necessary expertise to continue to successfully run the Sports Direct business," it said.

There is currently no information on when a meeting would be held.

The move against the Debenhams board sets the scene for a potentially bloody battle should Debenhams boss Sergio Bucher choose to stay on and fight.

Shareholder opposition, led by Mr Ashley, resulted in his removal from the board in January along with then-chairman Sir Ian Cheshire, who promptly quit.

That vote followed a decision by directors to reject the terms of a £40m cash bailout offer by Mr Ashley - later agreeing a deal with banks instead.

A statement from Debenhams suggested no white flag was about to be waved.

It said that the board had been engaging with Sports Direct and our other stakeholders and was "disappointed" by the action.

The company added that it was "focused on delivering the restructuring of its balance sheet".

Shareholders in the chain could be forgiven for taking a punt on a shake-up under Mr Ashley.

They have seen the value of their holdings plunge steadily since 2015 - by 85% last year alone - to the point where its market value on Thursday night stood at just £37.5m.

The turnaround plan currently being executed includes the closure of 50 stores with the loss of thousands of jobs as Debenhams grapples the fallout from years of stiff competition - particularly online.

Mr Ashley has set his sights firmly on the department store sector - snapping up House of Fraser following its collapse last August and revealing an ambition to turn the chain into the "Harrods of the high street."

In full: Mike Ashley on the future of the high street

There is a chance that Sports Direct investors will welcome his exit plan as Mr Ashley's business interests outside the chain he founded in 1982 expand.

They have had been a rocky relationship with Mr Ashley over the years, especially at the height of the PR crisis for Sports Direct in 2016 when its working practices - described as "Victorian" by unions - and pay policies came under the spotlight of MPs.