Sports Direct brand suffers under another damning expose, but in the end will profit conquer all?

Sports Direct is no stranger to being in the headlines for all the wrong reasons but with its stock down 21 per cent than it was a week ago, industry observers are questioning whether the battered reputation of its brand is finally starting to impact its long-term value.

The Guardian reported that warehouse staff are unpaid for the mandatory security searches that take place at the end of each shift – averaging an hour and 15 minutes a week that is unpaid – and face "harsh deductions" to their pay if they clock in for a shift just one minute late.

It's not the first time this year that the working conditions at the high street giant have been put under the spotlight. A Channel 4 Dispatches episode alleged that zero-hour contracts, public rebukes for not working fast enough, as well as questionable pricing tactics were used to keep the cost of its wares at rock bottom while maximising margins.

On the back of the programme, YouGov data suggested that this had a significant impact on consumer attitudes towards Sports Direct. Its Brand Value metric showed a decrease in whether people believed Sports Direct offers good value while its Buzz Metric, a measure of whether someone has heard something negative or positive about the brand, fell to its lowest level. Purchase Consideration also plummeted.

Chief executive Mike Ashley appeared to anticipate the potential damage the Guardian's expose could have and used its results statement from earlier today to talk up the improvements to warehouse working conditions it would address. The statement also revealed plans to improve how long people have to wait to be searched.

“A number of issues were raised by shareholders at our AGM which we have addressed, for example the inconvenience experienced by some warehouse workers from the logistics of the security process when exiting the warehouse," a spokesperson said. "Following a review, the process has been streamlined, which has led to a reduction in waiting time."

However, analysts quoted by other media outlets have suggested Ashley could merely be paying lip service to the issues in order to curb the media furore.

Phil Dorrell, partner at Retail Remedy, said some of the accusations aimed at Sports Direct, while fair, could be leveled at any number of high street brands and while the searches seem other-the-top, reducing losses is ultimately one of easiest ways Sport Direct is able to maintain its close margins.

"Will they do anything fundamental about this? I doubt they will," said Dorrell. "Ashley is a man who has proven to be somewhat stubborn and there may well be some PR to try and change perceptions but he will feel that profit conquers all and the shareholders eventually all vote with their wallets. In this he may be right, once the spotlight has been removed it is likely [shareholders] will come back, having the opportunity to once again make more money."

It's a situation comparable to e-commerce giant Amazon in August. A 6,000 word New York Times article slammed the working conditions of the retailer before the story was picked up and further explored by other news outlets worldwide. Yet just a few months later, Amazon basked in its biggest ever trading day as Black Friday shoppers turned to it for pre-Christmas bargains.

So while shareholders might be buckling under the pressure of name tarnishing, it's unlikely they'll stay away for long. Sports Direct said its results for the year were comparable to the build up to the FIFA 2014 World Cup. And with 2016 set to see sports fans ready themselves for both the Olympic Games in Rio de Janeiro and the 2016 Uefa European Football Championships, it's unlikely consumers will stay away for long either.