David Richardson has abruptly quit as chairman of Sports Direct International, saying he had been "unable to establish a strong working relationship with the executive team".
His unexpected exit is the latest blow to the credibility of Sports Direct, owner of the Sports World chain, and its billionaire founder, Mike Ashley.
The reclusive Mr Ashley, reckoned to be the 25th richest person in Britain, raised £930m when he floated his sports goods empire on the stock market in February.
But the company has been dogged by controversy, not least because of Mr Ashley's uncommunicative approach to the City, where he and his executives refuse to attend investor meetings.
Concerns have also been raised over the unconventional boardroom arrangement whereby Mr Ashley, who remains the controlling shareholder, has the role of unpaid executive deputy chairman.
Mr Richardson, a former Whitbread finance director, was brought in as chairman of Sports Direct ahead of the float in an effort to ease City concerns over the way the business was run.
News of his departure this afternoon pushed shares in Sports Direct to a new low, as they tumbled almost 5% to 205p. This is more than 30% below their February flotation price of 300p.
The group owns the discount Sports World chain and is the UK's biggest sportswear retailer. It has 465 Sports World stores, together with Lillywhites in London's Piccadilly and sports brands including Dunlop, Donnay, Kangol, Karrimor and Slazenger.
In April - just eight weeks after it floated - it warned of a sales slowdown in a statement that prompted one analyst to describe the business as "a car crash."
The group also today announced the appointment of Credit Suisse and Merrill Lynch as joint brokers. It has hired a new financial public relations firm in an effort to improve communications with the City, its previous PR advisors having been sacked shortly after the float.
Today's statement said the company "remains committed to strengthening further its Board as well as improving the company's external relations with all its stakeholders and its overall corporate governance."
Director Simon Bentley, former chairman and chief executive of Blacks Leisure, in which Sports Direct has a near-30% stake, is to become acting chairman until a permanent appointment is made.
The group said the appointment process has already been started and it is also in the process of recruiting a further non-executive director to the board.
Chief executive Dave Forsey said that, with the help of its new advisors, the group "looks forward to strengthened relations with the City and our shareholders.'
When Sports Direct made its stock market debut, Mr Ashley, who has been dubbed "Britain's answer to Howard Hughes", said he planned to put his £930m proceeds in the bank.
But he later spent almost £200m buying up a 3% stake in the German sportswear group, Adidas. And last week he launched a surprise £133m takeover bid for Newcastle United football club.
The Newcastle move came after he snapped up the near-42% stake in the club held by the family interests of life president Sir John Hall for £55m.
His bid for Newcastle United heightened worries among investors that the lines between his quoted retail company and personal business interests are becoming increasingly blurred.
It also led some analysts to question whether even someone with Mr Ashley's retails skills was over-reaching himself.
Retail analyst Richard Ratner at Seymour Pierce said: "Despite the appointments, this, we are afraid, is the proverbial straw that breaks the proverbial camel's back.
"Whilst we feel the company is perfectly sound, the issues of the last three months make it very difficult for us to continue at this time with a positive recommendation."
