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[edmundshaw] 10/3/2017 10:03

Seriously, if you are going to make a bear argument, saying if it drops it might drop further is not very convincing. At least Simon's posts have some content, even if it's a bit one-sided.

[simon templar qc] 10/3/2017 09:31

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Former M&S boss: 'Something has got to give'

Today Programme
BBC Radio 4
Posted at
6:37

"We are very good, we are very efficient, we are very good at squeezing a bit more out of our organisations, but you can't do it forever," says Ocado chair, and the former boss of M&S, Lord Stuart Rose.
"There is a point, at which time, you have to say hells bells, something else has now got to give."
Lord Rose says there are too many retailers in the UK and they are facing rising costs. That will probably mean a round of mergers and acquisitions or they might become more cautious and invest less "which is prudent, but not good for the economy".

[simon templar qc] 10/3/2017 09:22

foxy

Just dealing with reality, if I thought Debenhams was going up I would provide some evidence.

By the way Stuart Rose has recently said there are too many retailers around all cannot make money there will have to be consolidation.

The problem with Debenhams is the long leases.

[edmundshaw] 10/3/2017 09:11

And if 40p doesnt hold then 35p is possible, and if 35p doesnt hold then 30p is a possibility, and if 90p doesnt hold then £1 is a possibility. Rivetting stuff.

[1fox1] 10/3/2017 09:01

Are you short Barrie? Or just interested in the slow demise of DEB. I do agree though if 50p doesn't hold 40p is a distinct possibility

[simon templar qc] 09/3/2017 21:08

More analysis on John Lewis:

JL employs currently 80 apprentices by next year it seeks to employ about 500 and by 2020 in the THOUSANSS!

The move to employ more apprentices suggests they want to pay lower wages to staff to lower staff costs.

The outlook statement also discloses like for like sales actually falling..

Outlook 2017/18

"For the first five weeks of the year, Partnership gross sales are up 0.5% on last year. Waitrose gross sales are up 0.4% (down 1.4% like-for-like, excluding petrol) and John Lewis gross sales are up 0.5% (down 1.4% like-for-like).

In the year ahead, trading pressures will continue as a result of the wider changes taking place in retail. The two major influences are pricing, where the rate of change in selling prices is likely to be significantly slower than the rate of change in input costs as a result of weakness in the Sterling exchange rate, and the continued shift from shops to online. These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.

In addition, we expect our short-term profits to be impacted by significant one-off costs of change as we accelerate aspects of our strategy to ensure the Partnership’s success. However, we start from a position of strength and our plans will navigate the Partnership through the uncertainty in the year ahead."

edit:

Households running up unsustainable debt adds to woes in the retail sector.

[simon templar qc] 09/3/2017 17:39

John Lewis has 3,000 fewer people than a year ago and that will be the trend..

[simon templar qc] 09/3/2017 17:22

I don't expect Debenhams to fare any better then John Lewis if anything they may fare worse. Workers face a decade of stagnant wage growth...

[tintin82] 09/3/2017 12:25

Excellent news for DEB.

[simon templar qc] 09/3/2017 12:16

When JL profits are scrutinised which City AM have profits at JL not at all good.



With a billion pension deficit to deal with as well its going to get more difficult yet.

[simon templar qc] 09/3/2017 11:09

Concentrate on this statement from JL:

""The two major influences are pricing, where the rate of change in selling prices is likely to be significantly slower than the rate of change in input costs as a result of weakness in the sterling exchange rate, and the continued shift from shops to online."

What that statement means is retailers are having to absorb price increases and cannot get away with price increases margins will suffer.

Debenhams will be no different currency is temporary rates and rents are increasing and so are staff costs.

[simon templar qc] 09/3/2017 10:34

Reaction to John Lewis..



"The partnership decided to hold back more of its annual profit in the face of an "increasingly uncertain market this year".
The group, which runs department stores and supermarkets, also warned of price pressures and intense competition."

Overall my feeling is High St will suffer this year.

Retail Gazette on JL

[simon templar qc] 09/3/2017 10:28

John Lewis press release:



Bonus cut to 6%

Financial results
In 2016/17 the Partnership delivered sales growth with both Waitrose and John Lewis increasing their market shares and customer numbers. Partnership gross sales were £11.37bn, an increase of £355.4m, or 3.2%, on last year. Revenue was £10.03bn, up by £277.4m or 2.8%.
Partnership operating profit before Partnership Bonus was £685.4m, up £154.0m or 29.0% on last year. This includes exceptional income of £207.2m, as explained in the table below (2015/16: exceptional income of £129.3m). Partnership operating profit before Partnership Bonus and exceptional items, was £478.2m, up £76.1m or 18.9% on last year

Outlook 2017/18
For the first five weeks of the year, Partnership gross sales are up 0.5% on last year. Waitrose gross sales are up 0.4% (down 1.4% like-for-like, excluding petrol) and John Lewis gross sales are up 0.5% (down 1.4% like-for-like).
In the year ahead, trading pressures will continue as a result of the wider changes taking place in retail. The two major influences are pricing, where the rate of change in selling prices is likely to be significantly slower than the rate of change in input costs as a result of weakness in the Sterling exchange rate, and the continued shift from shops to online. These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole.
In addition, we expect our short-term profits to be impacted by significant one-off costs of change as we accelerate aspects of our strategy to ensure the Partnership’s success. However, we start from a position of strength and our plans will navigate the Partnership through the uncertainty in the year ahead.

[harry_david] 09/3/2017 09:00

tintin, I am also a recent buyer, half the p/e of Marks, positive cash and the real pull is the forward dollar cover at $1.50 on 35% of sales through into next year. This must give a sharp retailer a glow in the morning.

[tintin82] 08/3/2017 21:33

Cheers. Definitely risky, no denying. But in my view the payoff potential is great.

[essentialinvestor] 08/3/2017 21:31

Takes guts to go against trend, easier to buy when everyone loves something,
good luck with your investment.

[tintin82] 08/3/2017 21:26

Of course it concerns me, it is not often that I would buy into a sector where profits are not rising at a steady consistent rate, however in this case I feel the cash generation and turnaround potential outweigh all else.

[essentialinvestor] 08/3/2017 19:54

Does the significant reduction on pre tax over the past 5 years not
concern you?, this during a supportive cyclical backdrop.


When structural headwinds meet the cyclical, which will happen, not sure
I would be overly optimistic. However, outside bid possibility, perhaps. All just IMV only.

[tintin82] 08/3/2017 19:47

Maybe you are right Simon, however I think you are overly pessimistic. This stock is seriously battered and unloved, yet there is no denying the cash generation.

Profit after tax last year was £96 mil. The company is currently valued at £640 mil. That's just insane cash generation and value in my book.

The high street is brutal, no denying, yet Deb has carved itself it a great market The wife loves the place, way better than Next apparently. I find the clothing very similar to M&S yet without the price tag that leaves you feeling rather ripped off after you leave the store.

I personally do not give a hoot about shorters, or brokers, as in the past I have found them both to be way behind the curve.

Of course if sales falter then the share price will drop further, but that's a risk I am willing to take. For me there is way more up than downside hence why I bought in Nov at 56.5p.

It will be an interesting one to watch for sure.

All the best.

[essentialinvestor] 08/3/2017 12:43

LMAO, that really did make me laugh.

Ordered from ASOS for the first time yesterday, use Amazon a couple of times a week usually.

[tintin82] 08/3/2017 12:42

The way Simon goes on I doubt he expects it to make the end of the year!

[essentialinvestor] 08/3/2017 12:32

Simon, do you expect DEB to survive the next recession?,
appreciate if you would prefer not to say.

[simon templar qc] 07/3/2017 14:26

9% of Debenhams shares are being shorted...



edit

Header updated to keep track on shorters my target price updated.

[simon templar qc] 07/3/2017 12:52

Consumers are switching to discounters particularly in food, food was overall in the black but non food deteriorating, that is why investors in Debenhams would do well to await JLP on Thursday. This is what SKY is saying...

"report by Sky News on Monday pointed to evidence that inflation was actually running at 3.3%.
It suggests that consumer spending power has gone back into reverse.
Paul Martin, UK Head of Retail at KPMG which compiles the BRC's figures, said: "Evidently February was yet another challenging month for the majority of retailers, with like-for-like sales down 0.4% on last year.
Food sales however, continued to buck the general trend by remaining in the black.
"That said, with inflation starting to have an impact on retail performance, it is clear that consumer confidence is showing signs of deteriorating."