Mike Ashley’s Sports Direct has been labelled “an embarrassment to UK corporate governance” after the chaotic announcement of its annual results last week, including multiple delays and the shock revelation of a €674m (£614m) tax bill.

Investors and analysts pointed to revelations of a poor performance at Sports Direct’s core chain, a string of ill-advised acquisitions, the exit of several senior executives and a £5.35m pay award to Ashley’s future son-in-law as evidence of a company with poor governance controls.

“This company is an embarrassment to UK corporate governance,” said shareholder advisory firm Pirc. “Years of ineffective chairing seem to have taken their toll, and the company veers from one mistake to the next.”

Pirc said independent shareholders had to “use everything they’ve got to push for better governance” as “this farcical behaviour has gone on for far too long”.

Shares in the retail group dived by more than a quarter at one point on Monday as the market responded to a rambling statement put out after the market closed on Friday which included a warning that Sports Direct’s House of Fraser chain had “terminal” problems. The stock recovered most of its losses by the close of trading to finish down 6.5% at 214.8p.

Annual results published more than 10 hours late on Friday revealed that Sports Direct was struggling during tough trading conditions on the high street.

The delay was caused by the sudden arrival of a €674m initial bill from the Belgian authorities, relating to VAT charges on goods moved within the EU. Sports Direct only has 35 stores in Belgium but has two warehouses in the country.

Sports Direct defended its handling of the matter after the stock market closed on Monday. The company said it received notice of the tax bill at midday on Thursday and contacted its lawyers immediately. It did not receive further details of the demand until 11pm on Thursday, meaning its auditor Grant Thornton had to update its audit the next day.

The Financial Times reported that Grant Thornton has told regulators it intends to quit as Sports Direct’s auditor after the retailer’s annual general meeting in September, after concern over the delay in passing on information about the tax bill. In its statement on Friday, Sports Direct made clear it wanted Grant Thornton to stay on .

Logistics experts said the VAT bill could relate to either the movement of goods between Belgium and the retailer’s main distribution centre in Shirebrook, Derbyshire, or online sales.

The company has reassured investors the bill was unlikely to result in the full amount falling due with one year. But some analysts said a £54.6m operating loss at House of Fraser, which Sports Direct bought for £90m nearly a year ago, only compounded difficulties at the group’s established UK sports stores, where sales fell 1.6% . The company admitted its relationship with brands was “currently challenging”, despite efforts to improve the look of its Sports Direct stores.

“The home truths about the core Sports Direct business were pretty shocking and management seems to be out of ideas,” said analysts at the brokerage firm Peel Hunt. “Whilst Sports Direct may have done all the likes of Nike and Adidas asked them to do in the flagship stores, the premium product that maybe it was expecting as a consequence has not emerged. And it doesn’t sound like that is about to change.”

“Sports Direct now seems to be strategically snookered, checkmated and clean bowled. The shares are hard to value, but are surely only for the very brave.”

David Cumming, the chief investment officer for equities and head of UK equities at Aviva Investors, told the BBC on Monday: “Sports Direct is almost a case study in failed corporate governance.” He said Ashley “has obviously got retail talent – or had retail talent”, but the firm had “lost its way”.

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In the annual results, Ashley said the state of House of Fraser, which his company bought out of administration, had created “significant uncertainty” as to the future profitability of the entire group. He warned of further store closures at the department store chain and said he regretted the acquisition. The results also revealed that a consultancy business owned by Michael Murray, the fiancé of Ashley’s daughter, Anna, will be paid £5.35m for “value created” for Sports Direct last year.