The news that Debenhams (DEB) chief executive Michael Sharp will leave the retail chain next year more than overshadowed the group's latest set of results. Mr Sharp said he will stand down "at some point in 2016" after serving five years in the role - a timeline he maintained was always his intention. But news of the departure followed widespread reports of shareholder discontent at Debenhams regarding the lack of profit growth or share price momentum under Mr Sharp's leadership. By announcing his exit, the outgoing boss said he hoped to put an end to the speculation before it became a "distraction". No comments were made regarding his future plans, his successor or his final remuneration.
As far as the numbers go, last year's figures comfortably met analysts' expectations. Like-for-like sales grew 2.1 per cent at constant currency or 0.6 per cent at actual exchange rates. Many have criticised the high level of promotional activity at Debenhams, but Mr Sharp said the group cut the number of promotional days by 17 last year, taking the total to 42 fewer such days since spring 2014.
Despite this reduction in promotional activity, Mr Sharp said Debenhams had grown its market share and that gross margins remained stable. Margins on marked down items actually improved by 90 basis points. As November's Black Friday looms large, Mr Sharp said the US-led bonanza actually falls in the existing 'Big Gift Event' promotional period at Debenhams. Therefore, he does not anticipate any great impact from that day's mega-rush.
Nevertheless, investors will want to see how Debenhams fields the inevitable surge in customers on Black Friday - both in store and online. Over the past year, website sales grew 11.4 per cent to £388m, with online cash profits also up 11.5 per cent. This was driven by a wider range of delivery options, including 'click and collect'. During the week before Christmas 2014, click and collect orders accounted for 40 per cent of all orders placed online.
Analysts at Peel Hunt expect pre-tax profits of £120m for the current financial year, giving EPS of 7.8p, compared with £114m and 7.6p for FY2015.
| DEBENHAMS (DEB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 85.2p | MARKET VALUE: | £1.04bn | |
| TOUCH: | 85.1-85.2p | 12-MONTH HIGH: | 96p | LOW: 60p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 26% | |
| Year to 29 August | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 2.21 | 160 | 9.1 | 3.0 |
| 2012 | 2.23 | 158 | 9.8 | 3.3 |
| 2013 | 2.28 | 139 | 9.2 | 3.4 |
| 2014 | 2.31 | 106 | 7.1 | 3.4 |
| 2015 | 2.32 | 114 | 7.6 | 3.4 |
| % change | +0 | +7 | +7 | - |
Ex-div: 3 Dec Payment: 22 Jan *Includes intangible assets of £932m, or 76p a share | ||||
