Sergio Bucher, Thea Bregazzi and Justin Thornton'Studio by Preen' launch, London, UK - 04 Apr 2018

LONDON — The problems at Debenhams have gone from bad, to worse, to weird.

The troubled British retailer, which early Thursday reported a 3.4 percent decline in pre-Christmas like-for-like sales, has seen its chairman and chief executive officer kicked off the board of directors.

Two billionaire shareholders, Mike Ashley of Sports Direct and Micky Jagtiani of the Dubai-based Landmark Group, voted against the reelection of chairman Sir Ian Cheshire and of ceo Sergio Bucher to the board. They made their views known during the annual general meeting a few hours after the Christmas trading results were released.

Cheshire has now left the company but Bucher, who’s been fashioning and executing a turnaround plan for Debenhams, will remain, in what must now be the most unconventional management setup of any publicly listed British retailer. On Thursday, shares closed down nearly 15 percent to 4.8 pence.

Together, Ashley and Jagtiani hold 37 percent of Debenhams shares, and it remains unclear whether they were working together to oust the two principals. Ashley is angry at Bucher and Cheshire for having rejected his offer last month of a 40 million pounds loan to the store.

At the time, Debenhams said that while it welcomed Ashley’s interest in, and engagement with, the company, there were too many conditions attached to the money and accepting the loan would affect the interests of the other stakeholders.

Stripping out Sports Direct and Landmark, the vote for Bucher to continue as a member of the board was approximately 99.6 percent in favor. The number of votes cast on Thursday was low, allowing the two big shareholders to have their say.

Under normal circumstances, any ceo thrown off a board would head for the exit, but Debenhams said in a statement that the board is “mindful of its responsibilities to all shareholders, and has full confidence in Sergio and in the management’s plan to reshape the business.

“As a result, the board and Sergio have agreed that he should continue as ceo of Debenhams plc, reporting to the board. It is in the best interests of Debenhams plc that the executive team remains fully focused on delivery of the plan.

“In the meantime, the board remains open to constructive suggestions from shareholders that are in the interests of the business as a whole. The board is committed to delivering the appropriate capital structure to ensure a sustainable and profitable future for all stakeholders.”

Last October, Debenhams reported that in fiscal 2017-18, losses amounted to 491.5 million pounds, compared with a 59 million pounds profit in the previous year. The losses came mainly from write-downs and other restructuring measures.

Debenhams is looking to shut 10 to 50 units over the next three to five years. An additional 50 million pounds of costs will be cut, while future investments will focus on revamping best-performing stores, according to the company’s new Debenhams Redesigned model.

Terry Duddy, Debenhams’ senior independent director, has been named interim chairman with immediate effect. After taking on the new role, he said, “I recognize that individual shareholders have wished to register their dissatisfaction. I would like to thank Ian for his strong leadership of the board and his contribution to the business. We wish him all the best for the future. I am looking forward to working with Sergio. My first task is to meet with shareholders so that I understand any concerns that they may have.”

Ashley, a divisive figure in the U.K., specializes in swooping on distressed companies and buying them at a knockdown price. Best known as the owner of the sneaker and sports equipment chain Sports Direct, he purchased the ailing House of Fraser chain of department stores last year, promising to turn it into “the Harrods of the high street.”

He’s wanted to have a bigger say in Debenhams’ strategy for a while, and now he clearly has his chance.